Getting an "a" on Credit Report Cards

A Credit Article Contributed by Lilly Allison

What is a Credit Report?

A credit report is a report issued by one of three nationwide companies, Experian, Equifax or Trans Union that details your credit history. It shows how you pay your bills, whether you've defaulted on a credit payment, and whether you've filed for bankruptcy, been arrested or sued. They are used to evaluate what interest rates you will get, and how likely you are to repay.

What is my credit score?

Your credit score is based on your report, and determines whether you are creditworthy. Your credit experiences are collected, and using a statistical program, compared to other consumers, which generates a number, or score, that determines whether a company should offer you credit. The higher your credit score, the lower interest you will receive on auto loans, credit card interest rates and mortgages.

Here is the breakdown of how they determine your score: 35% of the score is based on your payment history, 30% on outstanding debt, 15% on the length of time you've had credit, 10% on the number of inquiries on your report, and 10% is the types of credit you currently have.

How do I obtain my credit report?

Free reports are becoming available on a "regional rollout" that started in December. According to the Federal Trade Commission, consumers in the Western states are already eligible to obtain theirs. Midwesterners will be entitled to their reports beginning March 1, 2005, while consumers in the Southern states will have their free reports available on June 1, 2005.

After September 1, 2005, free credit reports will be available for those on the East Coast, and for everyone else regardless of where they live. To receive your free report, go to www.annualcreditreport.com. The law allows you to get a one free copy from each of the nationwide companies during the year.

What information will I need to obtain my Credit Report?

You will need to give your name, social security number and birth date. Former addresses may be requested, and possibly the amount you pay on your car loan, mortgage, or line of credit that only you would know. It is up to you to get your free report, they will NOT be contacting you, so don't respond to email or letters claiming to be from the website or Experian, Equifax or Trans Union as they are most likely a scam.

Why Should I Get My Credit Report?

Because it contains information about your credit history that will affect your ability to get a loan. You want to be sure to check the information to make sure that all the information is correct and that you haven't been a victim of identity theft. Wrong information can affect your future financial transactions.

What is My Information is Wrong?

Send a letter to the national reporting company and the company that provided that information, explaining what you believe to be incorrect. By law, they are responsible for correcting your credit report, if it does prove to be in error.