Building good credit is critical for saving money and one day getting rich. We know that big purchases like homes and wedding are made on credit, and the better your credit, the greater your savings. Good credit can save you hundreds of thousands of dollars in interest over your lifetime.
Credit reports can affect everything from mortgage rates and credit approvals to apartment requests and even job applications. That’s why it’s important to familiarize yourself with your credit and review your credit report once a year.
Credit Report vs. Credit Score
The two things that make up your “credit” are your credit report and credit score.
Your credit score is based on many factors, including:
- Payment History (35%)
- Amounts Owed (30%)
- Length of Credit History (15%)
- Types of Credit (10%)
- Credit Inquiries (10%)
Your credit report contains information that is provided to potential lenders. The report includes:
- Basic identification information
- Lists of all your credit accounts and how long they’ve been active
- Loan amounts
- Credit history, such as how often you pay your bills on time and any late payments
Credit reports may also include:
- A list of businesses that have given you credit or loans
- The total amount for each loan or credit limit for each credit card
- How often you paid your credit or loans on time, and the amount you paid
- Any missed or late payments as well as bad debts
- A list of businesses that have obtained your report within a certain time period
- Your current and former names, address(es) and/or employers
- Any bankruptcies or other public record information
Get One Free Credit Report a Year
It’s extremely easy to obtain a free credit report. Go get yours now!
By law, you can get one free credit report a year from each of the three nationwide consumer credit reporting companies by requesting them on www.annualcreditreport.com. Do not use any other site. This one is the only one that is authorized by Federal law. It’s important to request credit reports from all three nationwide consumer credit reporting companies — Equifax, Experian, and TransUnion.
Learn how to obtain your credit score. While you may have to pay a small fee, some banks let you view your credit score for free.
Make it a habit of checking your credit report every year to correct errors, prevent identity theft, and get familiar with your credit.
How to Read Your Credit Report
Verify that all personal information is correct and up-to-date:
- Social Security Number
Look for any accounts that belong to another person. When two consumers’ information is combined in a single report, it’s called a “mixed file.”
Verify that all account statuses are correct and up-to-date:
- Closed accounts reported as open
- You are reported as the owner of the account, when you are actually just an authorized user
- Accounts that are incorrectly reported as late or delinquent
- Incorrect date of last payment, date opened, or date of first delinquency
- Same debt listed more than once (possibly with different names)
- Accounts that appear multiple times with different creditors listed (especially in the case of delinquent accounts or accounts in collections)
- Accounts with an incorrect current balance
- Accounts with an incorrect credit limit
If you detect any errors on your credit reports, contact the creditor or company that issued the account or the credit reporting company who sent you the report.
Your credit report includes directions about how to dispute inaccurate or incomplete information or you can use our sample dispute letters for furnishers and credit reporting companies. For more information on reviewing your credit report, visit the Consumer Financial Protection Bureau’s website.
If You Have Debt
If you’ve fallen behind on your payments and find yourself in debt, start paying it off and improving your credit.
Contact DebtBlue for a free consultation with our debt specialists.