The Top Three Questions And Answers About Credit Reports
Credit is critically important in lending decisions, credit card accounts, and your overall financial health. Understanding your credit score and your credit report is therefore important. Unfortunately, many consumers are still confused about the basic elements of their credit, their ability to see their credit reports, and what to do when there are errors. Don’t count yourself among the befuddled any longer! Read through the top three questions and answers about credit reports below.
What’s in my credit report?
Your credit report is a compilation of your financial activities. It works by pulling in data from each financial institution or credit card company with which you have a lending relationship. It may also include information furnished by the IRS or other government agencies about debts owed, as in garnishments or penalties for back taxes.
Most credit reports cover the following areas:
- Payment history. For each line of credit or revolving account listed on your credit report, you should also see a statement of whether or not the account is current, what amounts are overdue, how long they have been overdue, and whether payments have been on time or late during the time in which the account has been open.
- Total amount owed. For account listed, you should see the total amount owed. This will give you payoff amounts for loans, credit card balances, and any past due bills that needs reconciled.
- Length of credit history. For each item on your credit report, you should see how long that account has been open. This will help you pick out new credit accounts and see if your personal credit history is accurate.
- Recent inquiries. Recent inquiries tells you how often you have had a business look at your credit for the purpose of a loan or new credit account. If there are inquiries that you didn’t authorize, it could be a sign of fraud.
Where can I get a copy of my credit report?
You can get a copy of your credit report from a number of sources. Some of these sources are free, while others charge fees. The government sponsored method for obtaining a credit report is to go through www.annualcreditreport.com, where you can request a free copy of your report once each year from each of the three major credit bureaus. You can also contact each of the three major credit bureaus directly to get a copy of your report, though you will be responsible for paying the charges for the report.
If you have a credit monitoring service, you may also receive regular access to your credit report through that service. Read through the fine print of you policy to see what you are entitled to get from them. Some credit monitoring services offer customers unlimited access to their credit reports, while others provide weekly or monthly access.
How do I fix a mistake on my credit report?
One of the purposes of looking at a credit report is to check for errors in the report. However, once these errors are identified, you still need to go through the process of removing the errors or having them corrected. The process for fixes mistakes on your credit report is governed by the Fair Credit Reporting Act and is as follows:
- Inform the credit bureau in writing that an item is incorrect. Your letter should list the item in question, what you would like done about the problem, and describe the documents that back your claim. Include copies of the documents with your letter, and send the letter by certified mail.
- Your credit bureau has 30 – 60 days to investigate the error. They do this by going back to the source of the data and having their data provider review the relevant information.
- When the provider reports back to the credit bureau, they must take action to justify, remove, or correct the item in question. In a perfect world, the provider of the data also fixes their reporting with all the other credit agencies, but you may have to check each one individually to ensure this happens.
- At the end of the investigation, you will receive notification of the outcome in writing. You will also get a free copy of your credit report reflecting any changes that result from your error correction.
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