If you want to borrow money, take out a credit card or get a cell phone contract, the lender will run a credit check before deciding whether you can be trusted to repay a debt. A credit report tells potential lenders how credit-worthy you are. It includes a history of your borrowing and repayment activity from the past seven years. Mistakes on your credit report can damage your credit history, lower your credit score and make it difficult and expensive to borrow money.
Getting a Copy of Your Credit Report
Everyone is entitled to a free copy of his credit report once a year. You can request copies of your reports from the three main credit bureaus - Experian, Equifax and TransUnion - via Annualcreditreport.com. This is the only website authorize to issue free credit reports on behalf of the bureaus. Be careful to avoid the many impostor sites used by unscrupulous people to steal your financial details. Alternatively, you can get copies of the reports directly from the bureaus by going to their official websites.
Checking For Errors
Once you have the report, go through it carefully. What may seem like a small typo can still hurt your score. Lenders are wary of inconsistencies. Check that your name, address, date of birth and Social Security number are all correct. If they are not, contact the bureau immediately to dispute the incorrect information. It may be harmless, but it can also be a sign of identity fraud.
Erroneous Accounts
Make sure you recognize all the accounts on your credit reports. Don't just check the names of the lenders; check the account numbers, as well. Fraudsters sometime open accounts in other people's names, leaving the victims in a financial mess. If you see that on your report, contact the bureau immediately. It can take years to recover from identity fraud.
Outdated Information
The information on your credit report must be up to date. If you've paid off a credit card and closed it, the report should reflect this. Negative information, such as missed payments and charge-offs, stay on your report for seven years. After that, they are erased. Bankruptcy can stay on your report for 10 years. If you find old information that should have fallen off your report by now, contact the bureau directly, who will investigate and fix the mistake. You may need to provide proof to support your case, such as canceled checks.
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