Three Reasons to Check Your Credit Report

You might only think about checking your credit report before you apply for credit. Many people are in this situation. They check their reports before they apply for a mortgage or a car loan. This, though, can be a real problem. To get the most benefit from your credit report, you really should be checking it on a regular basis. This means at least once a year, although checking your report once a quarter is an even better option. Here are three reasons that you want to stay on top of your credit report.

First, credit reporting bureaus are not known for their accuracy. Over 70% of credit reports have serious errors on them that can affect a person's ability to get credit. These errors can take lots of time and effort to fix. This means that if you simply check your report a week before you apply for a mortgage, you might not have time to fix the errors. You could have perfectly good credit but for an error, and the time it takes to fix that error could really put off your home buying prospects for a while.

Second, your credit report is a good way to make sure that you aren't a victim of identity theft. Those who check their reports on a regular basis are much less likely to become victims of identity theft than those who only check theirs when they need to. As soon as someone even applies for credit in your name, that will be reported to the credit bureaus. This is your first line of defense against having your identity stolen. This can be an expensive problem to deal with, so it's much better to check your report regularly so that you know your identity isn’t being used improperly.

Finally, your credit report is a good way to keep on top of your score for free. When you order a free credit report, you won't get your actual credit score. If you know, though, what goes into your score, you can have a good idea of where it will fall by looking at your report. This means that before you apply for a loan or something like that, you can easily spend some time upping your credit score. All you need to do is see what is against you on your credit report and to work to fix those problems.

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Top Three Reasons to Repair Your Own Credit to get your Best Credit Score

Credit repair sounds like an ominous thing. You may already know that if you?re going to apply for a home or car loan, you should try to get your credit score up. Did you know, though, that even if you aren?t in these situations a low credit score can harm you? Whether your score is low because of inaccurate reporting on the part of the credit bureaus, which is surprisingly common, or because you are drowning in debt, you need to take steps to fix it. Here are the top three reasons to repair your credit score.

• A higher credit score means better rates on major loans, and even credit cards. Even if you aren't applying for a new loan or mortgage right now, you can possibly lower your interest rates by improving your credit score by just a few points. Even one percent difference in a home loan can drop your mortgage payments by hundreds a month and your overall interest payments by thousands over the life of your loan.
  
  

  Right now is an excellent time to refinance homes and cars, and it's a great time to ask for a lower rate on your credit cards. You can save tons of money each month if you repair your credit and then refinance these items.

• Your credit score can affect your ability to move around in life. If you?re a renter rather than a homeowner, you might think that your credit score doesn't matter at all. This is definitely not true, though. Most landlords will check your credit before approving or denying your application for an apartment or rental home.
  
  

  Basically, your credit score becomes a character assessment that lets a landlord know whether you're likely to pay rent on time or not. If you could possibly be moving in the next few months, your credit score needs to be high before you apply for places to rent.

• Your credit score can actually affect your ability to find a job. This can be true no matter what type of work you do. Again, your score and report are character assessments that show how responsible you are with your money. If you're responsible with your own money, the logic goes, you'll also be responsible in your job and with your company's money. A low credit score may keep even an otherwise wonderful applicant from getting a job!

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Where Credit Bureaus Get Information About You

Credit bureaus are companies that can run a surprisingly large part of your life. They make up your credit score, which can affect your ability to get a job, a mortgage, or a car loan. These companies have all sorts of information on you. They know where you’ve lived since you’ve opened your first piece of credit, and they know your social security number. They have information on all the credit you’ve ever had as well as things like bankruptcies and missed payments to your cell phone company.

The question many people as is: Where do the credit reporting companies get all this information?The truth is that the information comes from a variety of places. There are hundreds or thousands of small local and regional credit bureaus in the United States. These smaller organizations basically spend time gathering information about consumers. They’ll learn things like who is asking about your credit history, how long you’ve had credit, and how much money you owe on your credit cards.

These companies will then sell their information to the major credit bureaus, TransUnion, Experian, and Equifax. These three organizations are the major ones that give out your credit score and credit report to credit card companies, mortgage lenders, and even potential employers. These companies use a specific formula to take all your credit information and compile it into a standardized credit score. This little number can really change your life for the better or worse.

The credit bureaus may also get information directly from your creditors. If you have a credit card with a major company like Visa, your credit information will probably be reported to all three major bureaus every month. Visa will tell them things like your current balance and credit limit as well as whether or not you’re making payments on time regularly. If you miss a payment one month or are a day or two late, they’ll report that, as well.

If you work with some smaller companies, though, they may only report to one of the companies. This is why sometimes one credit score or report may look different from the other two. When you go to check your credit report, you need to be sure that you get all three of them. This is especially true since credit bureaus often make mistakes, and you won’t find the mistakes of the same type on all three reports.

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There May Be Errors in Your Credit Report

It is not at all uncommon to find errors in your credit report, so you should be prepared to search through yours with a fine-tooth comb. Studies say that up to seventy percent of credit reports are likely to contain some common errors, so it is important that you do not let them slide. By correcting the errors that appear in your report, you can see the scores rise by twenty to one hundred points, depending on the type of error. It is your right to dispute any errors in your credit report, and the law states that all disputes must be investigated. The law also requires the source of the error to correct the errors with the credit bureaus immediately.

As you might imagine, the number one error that may appear in your credit report is an incorrect report about a missed payment on a loan or debt. Even with high-tech computing and reporting systems, it is possible that mistakes can be logged and reported. By providing proof of your payment, you can quickly have these reports removed from your credit score, so it is important that you maintain accurate records on your side, as well.

It is also possible that you could end up with negative reports on your credit as a result of family members with same or similar names. This happens quite often with fathers and sons that share the same name. If a family member has been reported on your credit score, then you can easily have this remedied. Again, it is important that you provide proof for your claim.

Finally, it is possible that identity thieves could negatively impact your credit score by opening accounts with your name. These are often harder to prove, but you will be surprised at how willing the credit bureaus are to work with you. Identity theft and credit fraud are rampant, and no one wants to see it solved more than the credit bureaus.

As mentioned, you should always keep good records of your payment histories. If you feel that there are mistakes on your credit report, then you should first notify the credit bureau with the erroneous report. Next, contact the creditor or bank that has submitted the error, and provide the proof that they will need to complete their investigation quickly. It may take some time, but you will see massive results in your score.

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Why Is One Credit Score Different From the Others?

If you,ve recently ordered copies of your credit reports, you may have noticed some funny things. You have three different credit scores, for one thing. There is one score for each of the three major credit reporting companies, Equifax, Experian, and TransUnion. These three companies should, ideally, give you similar credit scores, as their calculation procedures are basically the same. Sometimes, though, there can be a dramatic difference between the scores from these companies. Many consumers are confused and curious as to why this happens. There are a couple of reasons for it.

One of the natural reasons that this happens is that not every creditor reports to all three credit bureaus. Any time you take out a major loan, such as a home loan or a car loan, that should go to all the bureaus. Credit cards that you get through major credit card companies like Visa or MasterCard will go to all three companies, too. Information from smaller companies, though, such as cash advance places, apartment and utility companies, etc. may not go to all three companies. Sometimes your landlord might just report your late payments to one of the companies, which means that you'll have an extra strike against you on this report.

Another reason that one report might look different from the others is more frustrating: credit bureau error. A recent study estimates that about 80% of credit reports contain errors, which can seriously wreck the overall credit score of a consumer. If one of the companies makes a mistake, the other two aren't likely to make that same error. This can make your credit report and resulting score very different for that one company.

You can avoid the first problem by asking your creditors and other relevant people which credit bureaus they report to. Sometimes if you?re trying to rebuild credit, it's best to make sure that every company who is related to your credit will report to the bureau so that you have the best possible chance of rebuilding your credit quickly.

To fix the second problem, though, you have to do a little more work. Luckily, in the Internet age, you can dispute inaccurate credit report claims online. Just contact the company to let them know what the problem is. They're required to respond within a short time period. If you have trouble with this process, you can get a little help from specific credit repair tools that can help you write letters of complaint to the company with the inaccurate information.

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Divorce Can Certainly Affect Credit Scores

You may believe that you can keep your own financial identity when you get married, but the truth is that you will be come tied to your spouse in many more ways than you ever expected. Even if a split is amicable, it can leave you in financial trouble. Throughout the marriage, it is very likely that the finances will merge, and that one partner will take the majority of responsibility when it comes to paying the household bills. If a divorce occurs, these are the things that can lead to credit problems.

You must remember that divorcing does not end the shared financial responsibilities. If your spouse has credit problems, these problems will continue to plague you long after a divorce. There are several ways, however, that you can protect yourself from the credit problems that a divorce might bring. First of all, make sure you are aware of the accounts for which you are responsible. By assigning responsibility, there will be fewer arguments down the road.

A huge step is to dissolve any joint accounts. This does not just apply to bank accounts, but also car loans, mortgages, insurance, and utilities. This will save you a lot of heartache later as it will keep you from trying to split everything down the middle. You will also be responsible only for your personal finances, which will remove the possibility of paying for your spouse’s mistakes.

You may find it hard to part with your home, but selling the house after a divorce is really the best idea. Of course, it is harder if there are children involved, because they will already feel as if their world is slipping out from under them. From a financial perspective, though, it is better in the long run to sell the house and split the profits, rather than attempt to care for the house on your own. In some cases, one spouse found a credit rating ruined when the other spouse allowed the house to slip into foreclosure.

Lastly, be sure to document everything. Keep accurate records so that you can back up any claims in court. Divorce is certainly hard enough without adding the financial burdens on top, but you can find ways to protect yourself. It is not cold-hearted to take these steps immediately, either. After all, most people want to get their life back to some semblance of normal as soon as possible.

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How Credit Inquiries Can Affect Your Score

There are two different types of inquiries that may appear on your credit score. One is the soft inquiry, which is a look at your credit report for any other reason besides a purchase. This could be your own inquiry into your credit score, a potential employer’s inquiry, or for pre-approval purposes. A hard inquiry is a credit score check for the purposes of making a purchase. These hard inquiries will appear on your credit score, and a rejection can adversely affect your report.

All inquiries are recorded on your credit report, even the inquiries that you make for yourself. If you have several hard inquiries on your credit report, then potential lenders may believe that you are attempting to spend outside of your current means. This does not mean that you cannot shop around for a loan. Though all inquiries show up on the credit report, those that are similar and take place around the same time will end up grouped together as one hard inquiry.

Another benefit of having each inquiry reported is that you can receive early warning if someone attempts to apply for credit with your name. If you regularly receive credit reports, you can easily spot any unusual activity. This is why it is a good idea to subscribe to credit monitoring programs, though you can keep an eye on your score without outside help.

You need not worry that unauthorized individuals can receive your credit information. According to the Fair Credit Reporting Act, only legitimate business entities can access your credit reports. These inquiries will remain on your credit report for up to two years from the original placement. You can dispute any inaccuracies, but they will not be removed without hard proof that the report is incorrect.

It is very important that you keep a close eye on your credit report and scores. You will need good credit for many more things than you might imagine, and maintenance is the easiest way to ensure that you receive no surprises when you are preparing for large purchases. Keep the hard inquiries to a minimum, if at all possible, and remember that inquiries to certain credit reports will only appear on that particular credit report. For instance, if your car loan lender only checks the TransUnion credit report, then your inquiry will not appear on the other two reporting services.

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