Your three-digit credit score is an important number: Lenders of all types use it to determine whether you qualify for mortgage, auto or personal loans. They also rely on it to set the interest rates on these loans. If your score is high, you'll pay a lower interest rate. This is why it's so important to check your credit reports at least once a year. By doing so, you can uncover any problems, such as incorrect information about your bill-paying habits or open credit card accounts, that could lower your credit score.
Missed Payments
Visit annualcreditreport.com to order your three credit reports, one each maintained by the national credit bureaus TransUnion, Experian and Equifax. You're entitled, under federal law, to receive one free copy of each of these three reports every 12 months. Once you get your reports, search them for any incorrectly listed missed payments. This is one of the most common problems on credit reports. One of your reports might state that you missed three car payments in 2008 and 2009. You know you didn't miss any. It's up to you to correct this mistake, in writing, with the offending credit bureau. Doing so, and eliminating this negative mark from your credit report, can increase your credit score.
Open Credit Card Accounts
Search your free reports, too, for credit card accounts that the credit bureaus list as open even though you know you closed them years ago. Again, if you spot this error, correct it in writing and send it to the offending credit bureau, along with copies of the documents that prove that you have closed the account. Having too many open credit card accounts can harm your credit score. This is another credit report problem that you want to correct to help boost your credit score.
Personal Information
Your credit report will also include basic information about you, everything from the exact spelling of your name to your address to whether you've ever been sued. If you discover that any of this information is incorrect, it is once again time to contact the credit bureau in writing. Look especially for mentions of lawsuits, bankruptcies and foreclosures. If you never have suffered these financial stains, make sure to correct the error with the bureaus. These black marks can dramatically impact your credit score.
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