Why You Need a Credit Report

by Megan Hartman on May 13, 2012

Credit reports are a financial tool that you should review on a regular basis. A report will help you calculate your total debt along with helping you decide whether you should apply for a loan. When you review your credit report, it will also allow you to see the companies that are checking your credit.

After you’ve ordered a copy of your report, you can determine if incorrect information is filed from an unknown source. Another benefit to periodically reviewing your account is to confirm that your current creditors are reporting your payment history correctly. For example, when you make timely payments, this should be reflected.

Your purchasing and payment history is followed by banks and credit card companies along with other creditors. As a result, they will use this information when deciding to lend you money. You should check your credit report at least once a year from the three major credit reporting agencies, which are Equifax, Experian and Trans Union. Furthermore, you can request a free copy of your credit history every year from the three agencies. You can order reports more often, but should expect to pay a small fee.

Be sure to order a report from all three agencies as the companies may show different history, and you’ll want to make sure each company is reporting your history correctly.

Once you’ve discovered errors reported under your name, you can dispute the mistake. Keep in mind that the reporting company may investigate errors for up to 30 days. Therefore, when you’ve requested a review, be patient during the investigation timeframe. When you request a copy of your credit report, the agency will typically include a form that will allow you to notify them of mistakes.

Upon filling out the error form, be sure to include as much information as you can. Also, you may include verification to prove your claim. For example, if a credit card company is reporting late history, then you can send a copy of your bank statement proving the payment posting dates.

Credit information remains on your report for up to 10 years. When you have accurate negative reporting, you can improve your credit report by consistently paying current bills on time. Also, consider paying off as much of your debt as you can without accumulating additional financial obligations.

When credit denials occur, they can happen as a result of poor credit, insufficient history and overextended finances.

Creditors will view your improved payment history and debt reduction in a positive light, which will help you during future credit requests. Lenders like to see positive payment history for at least a year. Furthermore, this step may help you attain reduced interest rates to help you pay down debt faster.
Credit reports are on file to guide both you and the companies who are considering lending you money. Therefore, you’ll both benefit from an accurate report.

Categories: Building Credit

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