Credit Reports And What To Do With Them
Below is a MRR and PLR article in category Finance -> subcategory Wealth Building.
Understanding Credit Reports and How to Use Them
Overview
In the United States, there are three main credit reporting agencies: Equifax, TransUnion, and Experian. These organizations assess the creditworthiness of potential borrowers for lenders. By law, individuals can obtain a free copy of their credit report from each agency once a year. Reviewing these reports annually helps ensure there are no errors or omissions.
How to Obtain Your Credit Reports
To access your free annual credit reports, visit [AnnualCreditReport.com](http://www.annualcreditreport.com), the only authorized source as per federal law. Approaching the agencies directly may incur a fee unless you meet other criteria for a free report, such as being denied credit.
For more frequent monitoring, you can purchase reports from any of the three agencies at about $10 each. Make sure to check all three, as the information might differ, and it’s vital to catch errors across all reports.
Understanding Your Credit Report
Credit reports are divided into four main sections:
1. Identifying Information: This includes your name, address, and social security number. Variations might exist due to creditor errors. It also lists your employers, driver's license numbers, and sometimes your spouse's name.
2. Credit History: Each account's data includes the opening date, type of credit (e.g., mortgage, car loan), total loan amount, current balance, account status (such as open or closed), and your payment history.
3. Public Records: Ideally, this section is empty. It lists bankruptcies, tax liens, and judgments, which can severely impact your credit score.
4. Inquiries: This lists both hard inquiries (credit applications that can affect your score) and soft inquiries (such as those by credit card companies for promotional offers), which do not affect your score.
Addressing Errors on Your Credit Report
If you discover errors, such as incorrect amounts or unfamiliar accounts, you can dispute them. Use the form provided with a mailed report or submit your dispute online.
The agency must verify the information within 30 days. If verified and you still disagree, you can contact the creditor directly. If the information is found incorrect, the item must be removed from your report.
By staying proactive and informed, you can maintain a healthy credit profile and avoid potential issues in the future.
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