Credit Reports

Ensuring that the information contained in your credit report is accurate and up to date is a task that every citizen should take on annually. The US government has made this task easier by implementing a mechanism for free credit report. Citizens are now able to request free annual credit reports from each of the 3 Credit Reporting Agencies. How you go about this is important. Do not contact any of the 3 CRAs individually, as they will charge you for copies of your report. Instead, access your free credit reports online by;

1) visiting the centralized website at www.annualcreditreport.com, or;

2) calling toll free at 1-877-322-8228 or;

3) completing the Annual Credit Report Request Form and mailing it to:
Annual Credit Report Request Service
P.O. Box 105281, Atlanta, GA
30348-5281

One of the reasons why many believe that the government has implemented this centralized, free service is to combat the seemingly blatant disregard that the CRAs have demonstrated for years at ensuring that the information contained in an individual's credit report is accurate. Finding out that the information on your report is inaccurate is but the first, and easiest, part of trying to get that information corrected.

This is where professional credit repair services enter the picture. Any individual can get
inaccurate information removed from their credit report. What it takes is a great deal of
time and effort. There are rather complex steps that must be taken to correct mistakes on a credit report, and many people prefer to hire professionals, who are familiar with the laws and rules that govern the credit reporting industry, to handle it for them.

Why is an accurate credit report important?

Any inaccurate, negative information contained on your credit report affects your credit
score. A lower credit score has massive implications to your financial well being. Your credit report score indicates to lenders how reliable or risky a borrower is. A lower
score means that you will pay much more for any money borrowed, whether that be on bank loans, mortgages, insurance, automobiles, and anything else. This can literally result in an individual paying tens of thousands of dollars more than they should pay - simply for the privilege of borrowing.

Information contained in a Credit Report

1) Bill Payment history

How you pay your bills is important. If your bill payment history shows that you have a
history of paying bill late or not at all, your credit report and subsequent credit score
will reflect this. Any involvement with collection agencies will also be reported.

2) Outstanding Debt

How much debt you carry, and how effectively you service that debt, is important. Generally speaking, the less debt your carry, the more credit you can access. How you manage that debt will also affect your credit score.

3) Credit History

The longer your credit history, the better. A short credit history will not be weighed
against you if it's due to age, low debt loads, and timely bill payments.

4) Credit Applications

A creditor can see whether or not you've applied for credit by the number of recent
inquiries on your credit report. If there are too many recent applications, the information
will negatively impact your credit score. Keep in mind that any time you apply for credit of any sort, a request for your credit report will be made.

5) Type and Number of Credit Accounts

Having well established accounts that are managed properly is a good thing. Too many accounts, and those that are managed poorly, is negative information.

This is not an exhaustive list of the information contained on your credit report. Other
examples include whether or not you've filed for bankruptcy, and any history of
incarceration. Credit reporting models often take into account other information that isn't contained on a credit report, including assets such as property or automobiles, employment history, insurance, and so on.

Do not underestimate the importance of your credit report. Ensuring that it is accurate and up to date can literally mean the difference of tens of thousands of dollars over your adult life. That is a great deal of money that could be working for you elsewhere, such as building up retirement income or children's education funds.

Learn how much credit repair services cost and how fast they can fix your credit reports.

In The News: FTC advice on accessing your free credit report. (March 2008)