Credit reports are becoming an increasingly important part of the average American’s life. Almost all of us will need credit at least once, if not many times during the course of our lives, whether for a house, a car, or a home equity loan; the credit score on your credit reports is the number one factor influencing what types of rates and bargains you will get on any of these loans.
Why get credit reports?
When you apply for a loan, the first thing the lender’s going to do is check your credit. If you don’t know your credit history you’re already a step behind. Before you even apply for a loan, you should get at least one, if not more credit reports, so you’ll know exactly what the lender sees when they check your credit reports. Also, that way if your credit is poor you can take steps to repair it before applying for loans.
How to get credit reports
You can obtain a copy of credit reports from any of the three main credit bureaus; Equifax, Experian, and TransUnion. You may want to get credit reports from all three since they may vary slightly. There are other places you can get credit reports from, but since these three are the largest and most respected, your lender is likely going to go one of these places to check your credit. Credit reports will cost a small amount, usually about $10 depending on where you live, and it’s possible to get discounts if you get “three in one” credit reports, or credit reports containing information from all of the three main bureaus. You can get one by contacting the credit bureau either online or via phone. Make sure that you include the “credit score” option when you get your credit report.
What the scores on credit reports mean
Credit reports scores can range from above 800 to below 400. If your score is above 620 you are considered to have very good credit and will be given preferential treatment by lenders. Having a good credit score means that you have a proven track record of making your payments on time when you take out credit.
What to do if there are problems on your credit reports
If there is an inaccuracy on any of the credit reports, you can report it to the bureau and they are required to investigate the problem and fix it if necessary. If the report is accurate, but your credit is low, there are still steps you can take to improve your situation. First, don’t allow any more credit checks. Multiple credit inquiries will harm your credit, and you can circumvent this by obtaining a copy of your own credit report (which doesn’t affect your credit) so it is not necessary for lenders to check it. The main factor determining your credit score is your history of making payments on time. Try to make your payments on time in the future, and in the meantime, talk to your creditors. Ask your creditors with whom you have a good record to report that to the credit bureau, and try to work out a payment plan with your creditors that you are behind with in exchange for their retracting any negative reports they have made about you.
Since your credit score can have such a big impact on your life, it’s a good idea to keep track of your credit information regularly, not just when you are considering taking out a loan. That way you can correct any inaccuracies as they arise. Keeping your credit score high is worth more than the $8 or $10 you'll pay for credit reports from time to time.
By Riannon Cutler