Why Is It Important to Know My Credit Score?
It is important to know your credit score because your entire financial history is being tracked when you make a purchase. It is being tracked by numerous sources: other creditors, department stores, credit card corporations, banks, and financial institutions. All this information is then shared with credit bureaus. The credit bureaus also collect information on your job applications and know your job history. They even know whether you are a home owner or renter. This information is tracked to create a database for lenders to decide whether or not you are a credit risk when you ask to borrow money or get financing for a big ticket purchase.
How Your Credit Report Impacts Your Life
As you can quickly discern, this credit history can have a huge influence on where you live, how you live, and what your future opportunities might be. Ideally, you will need a clean bill of financial health before you make a big purchase like a new car or a home. However, despite the consistency with which your financial transactions are tracked, they may not be tracked accurately. In fact, errors are common, including blatant errors, like entries that state that you did not pay a bill when in fact you paid it in full. If you have enough errors and payment omissions on your credit report, you will be denied credit, loans, or purchases that you are actually eligible to receive or buy.
How to Get a Copy of Your Credit Report
There are three credit bureaus that collect information about your financial life: Equifax, TransUnion, and Experian. You can get a free credit report from each of these agencies once a year. If you desire to keep track of your credit reports more than once a year then there is a nominal fee of $10. In some states, the fee for your credit report may be even less. Apart from applying to see your credit report, you can also request a free credit report if you have been turned down by a creditor, and by law lenders need to appraise you of these rights. The window of opportunity to receive this credit report is 60 days.
How to Dispute Errors in Your Credit Report
After receiving your credit report, you should review each item on it carefully. You want to discern if (a) the listing belongs to you, and (b) if a loan, bill, or credit card charge that was paid off is still marked as open. When you find errors, you should notify the credit bureau and request a correction. Usually your credit report will come with a form to list inaccuracies. When you send this form in, add as much verification as possible, going into detail and sending copies of records that prove your statement. After receiving your form, the credit bureau is legally obliged to act on your claim, which means that they will investigate it. If they decide not to change the entry, you can send a 100 word explanation why you contest the entry. This formal protest will be read by anyone who is checking out your credit report to determine your credit worthiness.