If you are applying for a loan or credit, records of your previous dealings with someone else's money are vital.
Whether you get that credit card may depend on a network of credit reporting agencies that either share information with, or are owned by, three major credit bureaus. This report is often a critical factor in credit scoring systems that lenders use to issue credit cards as well as mortgages or other loans.
So, if you're considering making a major financial move, it's a good idea to check your credit report to know where you stand. That way you can be aware of, and if necessary take care of, problems before they jump up and derail your plans.
If you find problems, or if potential creditors discover them, take steps to rebuild damaged credit and clean up that record.
If you've made mistakes in paying previous loans, bounced checks, made late payments or had other problems, you may still be able to reduce the amount of damage they will do to your credit with explanations or some basic repair.
Getting your hands on your credit reportObtaining copies of your credit reports is easy. Thanks to a 2004 federal law everyone is entitled to one free credit report from each of the main credit reporting agencies -- Equifax, Experian and TransUnion -- per year.
You must request your free credit reports through a centralized source. To order online, visit www.AnnualCreditReport.com. By phone, call (877) 322-8228. Or, you may complete the form on the back of the Annual Credit Report Request brochure, and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA, 30348-5281.
Time it, then check the detailsIf you are about to apply for a major loan, such as a house or car, it's important to give yourself time to correct mistakes or make good on delinquent accounts. Depending on the type of loan, you should give your self enough time. Here's a guideline:
- For a home, you should check your credit at least three to six months before you apply for a mortgage.
- For an auto loan, check your credit (and arrange financing with your bank or credit union) before you start shopping.
- For credit cards, check your report before you apply. The last thing you need is for a credit report problem to slow down your application -- particularly if it's not your fault.
Once you get the report, you should make sure the following information is correct:
- Your name, or names if you are or were married.
- Social Security number.
- Date of birth.
- Addresses of places you've lived.
- Names of places you've worked.
- Pending accounts and accounts that have been closed.
- Nothing has been on the report longer than is allowed by law:
Bankruptcies must be taken off your credit history after 10 years.
Suits and judgments, tax liens, arrest records, and most other kinds of unfavorable information must be dropped after seven years.
- Records of delinquent payments or other problems (i.e., make sure they aren't mistakes).