Fiscal Health Check: Your Credit Report

Do you check your credit report? The majority of American consumers don’t. Despite the importance of the credit score to their financial life, only one out of every five consumers check their numbers annually. And when they do check their reports, many are surprised by what they find!

This means most people don’t know where they stand with these all-important numbers. Your credit report is your financial history; a track record of borrowing and repaying banks, credit card companies, and any other lenders. This three-digit number shows how reliable you are at repaying debt. Anything over 700 points is considered good with a score between 750 and 850 deemed excellent.

So, how’s your credit?

The higher your credit score, the easier it becomes to get future loans, credit cards, and mortgages. And apart from financial institutions who use the figures to determine what you pay in interest rates, many landlords and even employers are using credit information to screen applicants.

It takes a long time to build good credit. It’s vital that you be aware of where you stand, and maintain or improve those all-important numbers. Managing your credit score effectively starts with checking your credit report regularly.

The first step is to draw your report

Your first step is to draw your credit report. The three main credit reporting agencies are Experian, Equifax and TransUnion. These bureaus don’t share information, so your credit report can differ slightly depending on the source. A credit score is based on data from just one of these agencies. Each agency will provide one free credit report each year and to get your free report, you can go to AnnualCreditReport.com.

Check your report for any errors; it’s not uncommon for credit reports to contain mistakes. A Most mistakes will be minor, but little mistakes can grow into a big problem if left. Checking on your credit report is just good financial sense.

Fixing the Numbers

If you haven’t been keeping an eye on your credit score, it’s possible you won’t be aware of any problems but you may be in for a shock. Your numbers may be lower because an old forgotten bill has gone into collection and is now showing up on your report.

A big mistake could be costly, dragging down your score or resulting in being denied credit altogether. So if your find errors, notify your creditors or financial institutions and report them to the credit bureaus right away.

Even small debts such as overdue library fines, unpaid traffic violations, utility bills from past homes or overlooked medical fees can be a big problem. These small, forgotten bills can lower an otherwise clean credit score by as much as 100 points.

Be sure to look for credit card accounts that aren’t yours, and payments mistakenly recorded as late. Any error on your credit report should be addressed with the bank or company that instigated it. Fix mistakes at the source to avoid the issue being misreported again.

If your credit rating is on shaky ground and you are planning on buying property in the future, you’ll want to boost your numbers. Don’t wait to get proactive; now’s the time to get started, since it can be months before positive changes take effect.

Get paid up

Delinquencies have the biggest negative impact on your score; be sure you pay any off in full. Next step is to write to the credit agencies to be certain the settled account is reflected in your report.

It takes effort and time because fixing a credit score can’t happen overnight. Most creditors only report to the bureaus once a month.

Checking your credit report and fixing any problems is a critical step to take before buying a home.

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