The Importance of a Free Credit Report

More than ever before, obtaining a copy of a free credit report is one of the best decisions a person can make. Most people have incorrect information on their report and have no idea until applying for a loan and then being denied. Even people with great credit need to request a copy of their yearly free credit report to make sure credit remains good. For people with bad credit, the credit report offers the chance to find mistakes that when corrected, will hopefully improve the overall FICO score.

Some people do not order a copy of their free credit report in that they believe the process is expensive and difficult. The truth is that every person in the United States has the opportunity to get a copy of his or her free credit report once a year. Even if someone needs a copy of the report more than once in a 12-month period, the cost is less than $20 per report. A great option is for people to purchase the three-in-one report, which for a price of less than $30, and includes information from all three reporting agencies.

To get the annual, free credit report, all a person has to do is make a request. This request can be made for each of the reporting agencies by phone, email, and regular mail. Today, many people prefer using the standard mail system in that they can choose certified mail and have proof the request was made. The reason this is important is that all three credit agencies have up to 30 days to respond to requests and with certified mail, the sender would have proof of an exact date.

In addition to the annual, free credit report, anytime a person is denied a loan for a home, car, unsecured credit card, etc, he or she would be permitted to ask for a free credit report. The key to building or maintaining good credit is the way in which the copy of the credit report is handled. Most people look for obvious problems, which might include a credit card balance showing as $5,000 when in fact it was only $3,000 or perhaps a late payment on an account that was never paid late. While these are certainly examples of what people need to look for, other mistakes might be overlooked.

For instance, when an individual gets his or her free credit report, other things that need to be looked at closely include:

? Closed Accounts ? Any accounts or loans that have been paid in full but still being reported as open, even if the balance is zero

? Divorce Accounts ? Accounts that had a person?s name removed by law as a part of a divorce settlement
? Inquiries ? Excessive inquiries, which are reported as negative should be identified

? Address and Contact Information ? Misspelled name or inaccurate address, especially if the individual has lived in his or her present home for years but the report indicates this is a relatively new address

? New Accounts ? Any new credit cards, loans or other accounts not being reported, especially those in good standing

? Collections ? Accounts that were at one-time in collections but paid off, still being reported as open or accounts that were going to go into collections but the individual paid the account off prior to that happening

When a person gets a copy of his or her free credit report, chances are the report will be several pages long. Since people need to get a copy from all three credit bureaus, there would be significant paperwork and details to review. For this reason, individuals need to set time aside to review the free credit report, missing nothing.

A person would start by making a copy of each free credit report, one to work on and the other for his or her own records. On the working copies, the person should highlight anything incorrect and make brief notes. Many people will go through the report once, take a break, and return to look at the information again, finding that one or more items were missed on the first go around.

Although it takes time and attention to go through all three reports, getting the credit updated could make a huge difference in that person?s buying power. For a person to get a copy of the free credit report each of the credit bureaus would be contacted and the formal request made. After the individual receives the reports, he or she would make notes regarding inaccuracies, and submit the changes to the respective credit bureau.

Credit agencies have 30 days to respond at which time the person would get a cleaned up copy of the free credit report, which may or may not have all the changes made. If discrepancies still exist, the person would identify anything missed, resubmit a request for change, and then wait for a second cleaned up copy. Sometimes, individuals have to go through this process several times to get the free credit report 100% accurate.