Before taking out your next mortgage loan or equipment lease for your business, it is important that you review your credit report to familiarize yourself with its contents. This is the approach often taken by the savvy shopper looking to get approved and qualify for the best lending terms available.
Ordering your credit report is easy. There are several reputable companies online that offer this service for a fee. You are also entitled to a free copy of your credit report annually. It is recommended that you order a tri-merge copy of your credit report. A tri-merge report includes data from all 3 major credit-reporting agencies – Transunion, Equifax and Experian. As you are never sure which agency your prospective lender would request your report from, it is wise to be prepared.
Although the formatting of each credit report varies depending on the bureau, most reports usually come with a guide that explains what is contained in it. A detailed credit report would list your personal information, accounts (both current and past), outstanding balances, current and derogatory payment histories, inquiries and contact information about all creditors reporting.
Review each report for accuracy. Each item listed would show which credit agency is reporting it. Should you come across any discrepancies on your credit report, the first thing to do is to match the item in dispute to the creditor reporting it and contact them right away to clear it up. Never take a creditor’s word for it even if they promise to delete any inaccurate information. At times they take a long time to rectify the error, other times they forget or ignore to.
Although federal law requires credit-reporting agencies to maintain accurate reporting, the responsibility is still primarily yours to make sure things are in order and that any inaccurate information is updated and fixed as soon as possible. To dispute items on your credit report, prepare a simple document to include the following:
- Current Address
- Social Security Number
- Date of Birth
- Creditor & Account # in Dispute
- Reason for Dispute
Along with the reason for dispute, always indicate the resolution desired. The bureau would investigate and update accordingly within 30 days. Sign and date the document, then attach a clear and valid copy of your drivers license. If the address on your credit report does not match your driver’s license, attach a copy of a utility bill that shows your name and address to match either the driver’s license or the credit bureau report. Ensure that you dispute the account in question with only the bureau reporting it. Abbreviations used to identify the reporting agencies include:
- XPN for Experian
- TU for Transunion
- EFX for Equifax
Ask that the agency provide you with an updated copy of your credit report by mail for your records.
Some other things to consider as you restore your credit are any revolving debt (things like credit cards) that you carry and how they impact your score. The rule of thumb is to keep the balance on your revolving debt account below 30% of your limit, even lower if possible and this would help increase your fico scores. If there are any outstanding collection accounts, contact the agency that currently holds them and negotiate a settlement to have them paid off. Remember to contact the bureaus once you pay it off so they can reflect this right away.
The truth is that you do not have to pay huge fees to anyone to clean up your credit. Fixing or repairing your credit is as simple as you make it.