Why You Should Check Your Credit Report
By Melanie Sullivan
Winter 2004-05
You probably know by now that good credit is a valuable asset. With good credit, you can get immediate approval for a loan, buy the house or car of your dreams and stop paying high fees and interest rates. Having good credit makes you feel good about your family's financial future.
What you may not know is that an estimated 50 to 70 percent of information found on credit reports is either incorrect or outdated. Credit bureaus collect information about you, but they don't check it for accuracy. Since even one mistake can cause you to be denied credit, it is important that you check your credit report for errors.
Another reason to check your credit report is to prevent identity theft. Identity theft occurs when another person steals your name, Social Security number or other credit information and uses it to buy goods and services or obtain credit in your name. You can help make sure that identity theft doesn't happen to you by being aware of the information on your credit report.
Here's how you can check your credit report for errors or signs of identity theft:
Check personal information. Is your name spelled correctly? Pay attention to things like "Jr." or "Sr." that can be easily confused. Is your address correct? Check previous addresses, too. Make sure your Social Security number, date of birth, phone number and employer all are current and correct.
Check public record information. Does your credit report show a bankruptcy, foreclosure, tax lien or court judgment? Are the dates correct? Is the information accurate? If so, should it still be reported? (See the corresponding table for how long information can be reported.)
Check credit history. The most important step is to review your credit information. Creditors focus on this section when determining if you are creditworthy.
First, check each account to make sure the information is accurate and up to date. Is the credit limit correct? What about the balance due? Creditors don't always update this information monthly, so it could appear that you owe more than you actually do.
Next, check the status of your accounts. Are they being reported as open or closed? If you have an account that is "closed" or a loan that is "paid in full," your credit report should clearly show it. Make sure the balance is being reported as zero. Also check account information such as "date opened" and "date of last activity" for accuracy.
Finally, look for negative remarks regarding your payment history. Look for words like "collection," "charged-off," "not paid as agreed," or statements such as "30 days late." Make a note whether the negative statement is accurate or if you plan to dispute it later.
Follow these tips for checking your credit report:
- Order your credit report from each of the three major credit bureaus - Equifax, TransUnion, and Experian. (See the information elsewhere on the page to learn how to obtain a copy of your credit report.) Three credit bureaus means three credit reports.
- Check each one carefully. The credit bureaus don't always report the same information.
- Make a different folder for each credit report. Staying organized will make the process much easier.
- Be patient and thorough. Highlight any mistakes you find. Even one error can cause you to be denied credit in the future.
- Highlight any information that looks suspicious or unfamiliar. Remember, you are also checking for signs of identity theft.
- Check all dates very carefully. Even negative information can be removed if it is out of date.
- Make sure the accounts listed actually are yours.
- Take your time. Work on your credit reports a little at a time in order to minimize frustration.
Keep in mind that credit bureaus are required by law to report accurate information. You have the right to dispute any outdated or incorrect information listed on your credit report. Check your credit report at least once a year to make sure it says what it should.
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Melanie Sullivan is a military spouse with degrees in law and finance, and is the author of a self-help guide to credit repair, "30 Days to Better Credit."
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How Long Can Information Stay On Your Credit Report?
Accounts in good standing: 10 years
Late or missed payments: 7 years
Collections: 7 years
Judgments: 7 years
Bankruptcies: 10 years
Credit inquiries: 2 years
Tax liens: indefinite
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How Can You Obtain Your Credit Report?
Equifax
P.O. Box 740241
Atlanta, GA 30374
1-800-685-1111
TransUnion
P.O. Box 2000
Chester, PA 19022
1-800-888-4213
Experian
P.O. Box 9556
Allen, TX 75013
1-888-EXPERIAN
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