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debt
Checking and reading your credit report

Time it, then check the details
If 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.

To give yourself 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.

Double-check the following:
  • 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
  • Records of delinquent payments or other problems (i.e., make sure they're not mistakes)

Next, make sure nothing has been on the report longer than is allowed by law.

Used-by dates
  • Bankruptcies must be taken off your credit history after 10 years
  • Suits, judgments, tax liens and most other kinds of unfavorable financial information must be dropped after seven years. If unpaid, tax liens can remain on the report for up to 15 years.

Get all of them
"Looking at one is a useless endeavor; you need to look at all three," says Howard Dvorkin, president of Consolidated Credit Counseling Services in Fort Lauderdale, Fla. "People tend to pull one and think everything is the same on all of them. That's not normally the case."

The reports will have different information because it's a voluntary system, and creditors subscribe to whichever agency they want -- if any at all.

Maxine Sweet, vice president of public education at Experian, stresses the importance of ordering the report directly from the credit bureau instead of asking a buddy who works at a bank to pull one for you. Those are written for people who work in the credit industry. The one you get from the credit bureau is designed for consumers.

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"The information is the same, but it's much more consumer-friendly," she says.

Well, not quite the same. But the differences, Sweet says, are only to make the report easier for consumers to read. The report sent to a lender will list the credit bureau member numbers of your creditors and it won't have the complete list of every company that's pulled your credit information for promotional purposes, like pre-approved credit card offers.

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