Free Credit Score Analysis

The responsibility of analyzing your credit report falls largely on your shoulders, but you can seek credit counseling to help you manage your debts. However, don't wait for a loan denial to know your credit score. Federal law entitles you to a free copy of your credit report every 12 months. Credit scores range from 300 to 850. Generally, if your credit is below 600, you are considered a higher credit risk.

Credit Report

Your credit report chronicles all aspects of your financial history beginning with your very first credit account. It also includes places you've lived, jobs that you held, names or aliases that you might have used and any public records, such as judgments and liens. When analyzing your credit report, it is important to take note of all negative items that are dragging down your credit score. Delinquencies, defaults, judgments and bankruptcies can kill your score. As you go line-by-line, identify any items that are false, inaccurate or incomplete which you can later dispute.

Getting Your Credit Report

Following the enactment of the Fair and Accurate Credit Transactions Act, the credit rating agencies created a website, annualcreditreport.com, so that consumers can have access their credit reports each year. Visitors to the website create an account and answer several security questions before gaining access to their credit report from Equifax, Experian and TransUnion. You are also entitled to a free copy of your credit report if a lender denies you credit. The lender must notify you regarding which credit rating agency it used to make its decision.

Correcting Errors

The Fair Credit Reporting Act promotes accuracy and privacy of information contained in consumer credit reports. According to the FRCA, the credit reporting agencies and the company or organization that provided credit information about you are responsible for correcting any errors in your credit report. If you find inaccuracies in your credit report, contact the CRA and the lender that supplied the information in writing. Your dispute letter should include copies of supporting documentation. The CRA has 30 days to investigate and must forward any information provided by you to the lender that supplied the information. You are entitled to a free copy of your credit report if your dispute results in a change. And, upon your request, the CRA must send notice of corrections to anyone who received your report within the last six months.

Rebuilding Credit

Take a proactive approach to rebuild your credit. Paying off debts, paying on time and using credit wisely are all actions that improve your credit score. According to FICO, creator of the widely-used FICO score, payment history and outstanding debts account for 65 percent of your total credit score. If you take on new credit such as a credit card, make small purchases than can be paid off quickly. If you want to avoid traditional credit cards, you can apply for a secured credit card that basically ties your credit limit to a cash account. If you are eliminating debts, start off with higher interest rate accounts.