CHICOPEE, Mass. (WWLP)–If you’ve made a resolution to get your personal finances in order this year, one of the first steps should be to pull your credit report and make sure all the information is current and correct.
What exactly is a credit report and why is it so important to your finances? A credit report is a history of your past financial transactions. This includes how many credit card accounts, loans, and utilities you have, both current and closed, and if you pay your bills on time. It also contains information about whether you’ve been sued, arrested, or have filed bankruptcy. Checking your credit report can alert you to possible identity theft.
Credit bureaus, like Equifax, Experian and TransUnion, organize this information and create a credit report. Then, they sell the information in your report to creditors, insurers, and other businesses that use it when considering applications for credit and loans, insurance, or renting a home. How you handled your money and paid bills in the past will help companies decide if they want to do business with you.
You can get a free copy of your credit report once a year at annualcreditreport.com or by calling 1-877-322-8228. You can also contact the three major credit bureaus directly.
Here’s what to expect when you go to annualcreditreport.com: First, you’ll fill out a form with your name, birth date, and Social Security number. Make sure you’re using a secured internet connection, not public Wi-Fi.
Next, you’ll pick which reports you want. You’re entitled to a free report each year from each of the nationwide credit bureaus – Equifax, Experian, and TransUnion. Sometimes one bureau will have slightly different information than the others. So, you’ll want to make sure all three reports are accurate. You can get the reports all at once or stagger your requests to keep an eye on things throughout the year.
At the end you’ll be asked to verify your information. This may include prior addresses, loans, or other personal information. This is to make sure that it’s really you ordering your report. If you have trouble with the online questions, you can call 1-877-322-8228.
Then, you’ll get a copy of your credit report. You can look at it then or download it to review later. Just remember to keep the report stored securely – either under lock and key if it’s paper, or on a password-protected device if it’s digital.
Once you get your reports, what should you be looking for? Make sure the information is correct:
- Personal information – are the name and addresses correct?
- Accounts – do you recognize them? Is the information correct?
- Negative information – do you recognize the accounts here? Is the information correct?
- Inquiries – do you recognize the places you applied for credit?
Be sure the information in your report is accurate, complete, and up to date before you apply for a loan for a major purchase like a house or car, buy insurance, or apply for a job.
If you find mistakes on your report, there are ways to fix them. You can dispute mistakes or outdated items on your credit report for free. Both the credit bureau and the business that provided the information about you to a credit bureau are responsible for correcting inaccurate or incomplete information in your report. To take advantage of all your rights, contact the credit bureau and the business that reported the information.
Send a letter to the credit bureau that includes: your complete name and address; each item you’re disputing, and why; copies (not originals) of documents that support your position; a request that the mistake(s) be removed or corrected.
You might want to enclose a copy of your report, and circle the items in question. Send your letter by certified mail and pay for a “return receipt” so you have a record the credit bureau got it. Keep copies of everything you sent.
You also need to contact the business that provided the information. Send a letter disputing the information, and include the same information. Be sure to include copies (not originals) of documents that support your position. Many businesses specify an address for disputes. If the business reports the item to a credit bureau, it must include a notice of your dispute.
Most negative information will stay on your report for seven years, and bankruptcy information will stay on for 10 years. Unpaid judgments against you will stay on your report for seven years or until the statute of limitations runs out, whichever is longer.
It takes time to improve your credit, but you can rebuild your credit by paying your bills on time, paying off debt — especially on your credit cards — and not taking on new debt.
If you’re in debt and need help, a reputable credit counseling organization might be able to help. Good credit counselors spend time discussing your entire financial situation with you before coming up with a personalized plan to solve your money problems. They won’t promise to fix all your problems or ask you to pay a lot of money before doing anything.
You often can find non-profit credit counseling programs offered through: credit unions, universities, military bases, U.S. Cooperative Extension Service branches.
For more information you can contact the Federal Trade Commission (FTC).