Credit Reports

Credit reports are becoming a more and more important part of society today.  But many people still don’t know what a credit report does or what it is.  First let’s start with what a credit report is.  A credit report is a report that is generated for every person that has established credit at any time throughout their life.  This report is a detailed list of different accounts you have or have had, balances on accounts, payment history, and various other information.  This report is generated for lenders to look at to see how you are repaying your debts.  Lenders will use this along with your credit score to determine if it is risky or safe to lend you money. 

You may be asking “why do I need to look at my credit report?”  The answer is simple…identity theft.  Over 70% of credit reports have errors.  These errors could be harmless mistakes that have been reported, or they could be an indicator that you are a victim of identity theft.  If you check your credit report and find errors, dispute them immediately.  Another reason a credit report is so important is it can now be used to decide whether or not you get insurance, a cell phone, or even the deciding factor in a job opportunity. Thus if you have seen your report too, you have the same information that the person you are negotiating with has. This means you can ask for more favorable options or know when an offer is reasonable given your records.

 In 2003, Congress enacted the Fair and Accurate Credit Transactions ACT (FACT ACT) as a means to both empower consumers in their negotiations but also to check that the information is correct and there has been no wrongdoing. It serves as our best defense against identity theft. The Fact Act states that consumers are entitled to one free report from each of the 3 major credit reporting agencies every 12 months by each of the credit reporting agencies (Equifax, TransUnion, and Experian).  This now allows everybody to see what information is being provided to lenders to make sure it is accurate.  If you are interested in getting your free credit report please visit www.annualcreditreport.com.  If you prefer, you may also call for this report: (877)-322-8228.  This site is free and is secure.  It will ask you to verify your identity and then will allow you to view your credit report for free.

Source:  Financial Focus Newsletter, Spring 2008