Wednesday, September 9, 2015

4 Steps to reviewing your credit reports

If you're looking to make a major purchase and need a loan, the interest rate you're quoted and whether you qualify for a loan both depend on your credit history. How much debt you have and how well you're managing it are reported as part of your credit history, which in turn affects your credit score, and then affects that loan you're looking for. Here are four steps to take to make sure your credit is good enough for that major purchase:

  1. Check your credit history. Visit www.annualcreditscore.com to order your credit reports. Federal law allows consumers free access to their reports once a year. There are three credit bureaus that collect your financial data that eventually make up your combined score. Each agency collects different data, so it's wise to check all three reports.
  2. Have your financial information available before you request the report. You will be asked personal questions to verify your identity as you progress through the site.
  3. Carefully review all three reports. You're looking for any transaction that isn't accurate. If there are credit cards on that report you're not familiar with, you will need to investigate those. Also search for any outstanding debts that seem shady or any negative comments on the reports themselves. You can either dispute any claims on the site, or contact each vendor individually.
  4. Ask that your reviews of any disputable transactions be attached to the report. If you've gone through the dispute process and lost, you can submit a complaint and have it permanently attached to your report. This will ensure that your explanation is taken into consideration when banks request copies of your report.
Once your report is cleared and everything looks fine, be sure to continue paying any outstanding credit card balances on time, avoiding any needless fees, and being selective about opening and closing any accounts. These all affect your final score, which will determine how much you wind up paying for any loans you receive.

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