You, Your Debt, And Your Credit Report

By: Kathy Burns-millyard

What many people don't realize is that not only are they entitled to free copies of their credit report, they can actually work to improve it. Just like poor behavior contributes to a bad credit rating, responsible behavior can help you to achieve a good credit rating.

Your purchasing and payment habits are tracked by a lot of different companies and agencies, including your bank, credit card companies, department stores, and other creditors. These transactions are then reported to credit bureaus that compile your credit report. Then when you apply for credit, potential lenders can decide whether or not it is worth the risk to lend you money. Credit bureaus also keep track of your job history and other assets you may own.

It is important to know what contributes to your credit report so that you know what to expect when you are looking to buy a house or are applying for some credit. That way, you can work toward having a clean credit report so that there will be no surprises.

The best way to ensure that there are no surprises on your credit report is to take a look at it. Often there will be errors on it that can prevent you from attaining your future goals. To make sure you have an accurate look at your credit history, you need to check your credit report with each of three credit bureaus: Equifax, Trans Union and Experian.

You are entitled to one free copy of your report from each of these bureaus once per year. Ordering extra copies is possible for a small fee. Or, if you've been turned down for credit by a lender in the last 60 days, you are entitled to a free copy of your credit report. Lenders are required to notify you of this right if they turn you down.

When you receive the credit reports, look at them to ensure that all open loans and accounts are actually open accounts. If something you've paid off is still listed as open, you need to contact the credit bureau and ask for a correction. Another way to correct your report is to fill in and submit the form for inaccuracies that usually accompanies a credit report.

Even if the bureau refuses to make the correction, you can send a short letter, less than 100 words, explaining your side of the story and the bureau then provides to anyone that requests your credit report.

All debt is listed on your credit report. The more debt you have, the less likely lenders are to give you credit. And, if you have irresponsible spending or payment habits the likelihood that you can obtain credit is even less. It is important to understand that the debt you incur affects your credit history, which in turn affects your future finances. Information is retained on your credit history for up to seven to ten years.

If you have had a bad history with debt and payments, you can slowly improve your credit history by paying your bills on time, paying-down negative balances, and avoiding new debt.

Debt, Loans & Business Cashflow
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