Using Your Free Credit Report


Did you know that you are entitled, by law, to one free copy of each version of your credit report each year? This means that every consumer can get a free credit report from each of the three major agencies. Is this really important? Absolutely! A credit report doesn?t just show how a consumer uses their credit, it also determines if they?ll get a loan, good rates on their insurance or even be approved for a rental agency or get a job.

Why is the information in a free credit report so important to so many? Generally, those who review the data are looking for evidence of reliability, efficiency and responsibility. If they see unpaid debts and late monthly payments they?ll view the consumer as a credit risk and extend the least beneficial terms possible.

So, if you have received your copies for the year and are a bit shocked to see low credit scores and lots of negative marks, you may want to take steps to do some credit repair. The first thing to look at is all of the personal information data. Are all of the addresses valid and correct? If not, make a note of this and include this in any communication with the credit agency. Next, look at all of the inquiries to ensure that only those companies who should have looked at your report are listed. If there are many which are unfamiliar, in addition to some incorrect personal data, you may have been the victim of identity theft.

This is one of the main reasons that consumers should take advantage of their free credit report each year ? it will instantly point out if there has been illegal activity.
The next thing to do is look at the accounts listed and ensure that all the information about payments is correct. For example, if two reports list the phone bill as current and one as delinquent, obviously this single listing may be incorrect.

The free credit report will also show all of the account balances and limits and if the consumer is up to date with their payments. If this reveals inaccuracies, start noting them down for some attention a bit later on, and make sure they are addressed during any credit repair efforts.

Finally, look for anything that has gone to a collection agency or is a ?charge off?. These are the most damaging items on the report and should be a priority. If you have a few of them, there are a few steps that can be taken.

If an account listed on the free credit report indicates delinquency only, the consumer can still have this item eliminated by paying the amount due. The account holder should phone the company and discuss their options with the billing department. This could mean that they are going to have to pay the amount due immediately, or they may be able to negotiate a lower sum which allows the account to be closed.

It is important to understand a few things about these issues before contacting the company. If a consumer directly contacts a company to which they owe money, but with whom they have not been in contact for some time, that instantly re-opens the company?s interest in collecting the debt. So, the account holder should be prepared to offer a payment at the time of making the call. If a bill is under $500 it is best to simply pay the amount due and ask for a guarantee that the item will be removed from the free credit report entirely. This will not see the account removed, but it will see the delinquency removed. If the consumer is given a choice, they should ask that the account be left open, and this is because each account that has existed, but was closed is a negative item on the report.

Alternately, the consumer could negotiate a settlement amount to have the item removed from the report. Because the debt is still in the hands of the original company, not a lot of the total will be reduced. If, however, a debt is in the possession of a collection agency, it is quite likely that they will work with the former account holder to greatly reduce the total due.
What if you don?t have money to offer? If you cannot borrow the money from friends or family members, it is advisable to make a list of the strongest debts and tackle them one at a time. The money to settle the accounts can come from a company such as a payday loan company who will lend the funds, regardless of the contents of the credit report. This is a great way to eliminate the smaller balances without having to worry about seeking a traditional bank loan.

A good plan of attack would be to get the free credit report, itemize the items that can be corrected, and then take a loan to deal with a few at a time. The loan can be repaid and the next batch of items on the report can be dealt with through a second loan, and this process can be repeated until the report is repaired.