You might be surprised at how much information is documented about you and your credit habits.
Since we are such a global community today, very few creditors know the person personally that they are granting credit too. This leads to why they depend so heavily on a person’s credit history collected and reported by the three major credit bureaus (Equifax, Experian and TransUnion).
Even though credit reporting is a necessary evil, your first concern should be to know if all that is being reported about you is correct. As with so many other statistics this data is collected by humans and humans make keying errors.
So, it is a good idea to keep an eye on your credit history just for accuracy purposes. To do this you would want to get a copy of your credit report and review it. Everyone is entitled to retrieve a free copy of their credit report once every 12 months.
However, a lot of people once they get their credit report don’t understand how to read it. Not only will you want to look for just general reporting errors, you will also want to look for any general spending and paying habits that you have which are affecting your credit scores in a negative manner.
First you will want to make sure that all your personal information, such as name, address and employer is correct. This information can often be incorrect if you have a common name or happen to be a Jr. or Sr. or if you have just recently moved or changed employers.
Then you will want to look at all the credit items listed to make sure that they do indeed belong to you. If you find that an item is not yours then you will want to send what is termed a “dispute letter” to all three of the credit bureaus to get the item removed from your credit history. A dispute letter is simply a letter from you identifying the item that you want corrected along with a short statement that you would like to have this item removed from your credit history because it does not belong to you. The letter does not have to be long or complex. Actually, the shorter the better, just be sure that you clearly state what you want corrected.
A couple of other items that you might look for on your credit report are:
- Bankruptcies – It is not uncommon to find that a bankruptcy that has been discharged does not reflect so on the credit report. This information is found in the public records portion of your credit report.
- Collection items that have been paid may also not show correctly as paid.
If you don’t really have any major negative items on your credit report you may still need to look at your spending and payment habits.
If you fairly consistently make your payments late, then this will negatively impact your credit scores and it would really be in your best interest credit wise to change this habit. Your late payment information will show on your credit report under some headings of 30, 60 and 90. This translates into 30, 60 and 90 days late.
Another credit habit that people have and don’t realize the impact to their credit scores is the balance they carry on their credit cards. If you are maxing out your credit cards then this is also a negative for your credit scores. To stay in good graces of the credit score algorithms you should keep your credit balance at around 30 percent of your available credit balance.