Tuesday, February 3, 2015

What you should know about your credit report

Your credit history is as important as the type of car you drive or dream home you live in. Without a solid history creditors can refer to, buying such large priced items is impossible. While most consumers are aware that a credit report helps determine an overall rating score used by lenders, many buyers are not paying enough attention to what actually hits their reports.

Consumers can check their credit reports once a year. It gives them the opportunity to dispute any false claims that may have hit their reports or detect any unusual activity. Paying attention to what goes on a credit report can also protect consumers from identity theft and potential future credit problems.

The first step to avoiding any credit scam is to steer clear of any services that sound too good to be true. Any company or advertisement that claims to fix credit issues for a fee should not be taken seriously. The only way to monitor your credit report is to make it a habit to review it vigilantly. Second, be weary of anyone who charges a fee for any service related to your credit. Most services that include any evaluation of financial information should be verified.

The three credit bureaus that gather and sell your credit history have collaborated to offer consumers a free credit report. A credit score can also be obtained, but checking that too frequently can eventually affect your score. By requesting a report from www.annualcreditreport.com, you can avoid penalizing your score by reviewing your report for accuracy. The goal should be to ensure that anything hitting that report is valid and legitimate. If any item on the report seems shady, consumers have a right to request an investigation into that specific item. If the result is not in your favor, you have a right to ask that a copy of the investigation and its findings, along with any responses you offer, be included in any report sold to creditors.

Keep in mind that the three credit bureaus gather and sell different financial information. While their individual scores may vary by a small degree, each one is a rating to how financially responsible you are. Lenders look at the average of the three scores to determine how much money to lend and at what interest rate. Follow these guidelines to keep a healthy score:

1. Don't spend more than you have. It will be held against you and drop your credit score if lenders see you're not paying your bills on time or have even claimed bankruptcy.
2. Get into the habit of paying bills on time. Even if you can't pay the entire outstanding balance on a credit card, paying off that balance timely and consistently will help your overall credit rating. If you can pay more than the minimum balance, it will get you much closer to paying our outstanding balance within a shorter timeframe.
3. Focus on building a solid and long credit history by staying with one or two credit cards over the long haul. The longer your relationship is with a credit card company, the better your reputation as a reliable buyer.
4. Only enroll for credit cards you will actually use. Taking advantage of discounts by opening credit cards at small retail stores works against you in the long run. It will appear that you are carrying too much debt on the credit report and affect your score.

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