Using Your Free Credit Report


Many consumers know that they are able to get one free credit report each calendar year. What most people don?t know is that such a report actually includes three different reports altogether. There are currently three major credit reporting bureaus, and they are all obliged to provide a consumer with a copy of their report.

What value does the credit report have? Well, it is important to remember that it doesn?t just provide information about the debts you are currently dealing with. It also contains a majority of your consumer or borrowing history, your employment history and even all of your known living addresses.

Why should this information be of any value? Firstly, it is tremendously important to always remember that it is not only creditors who review the contents of each and every consumer credit report, but also insurance companies, landlords and many employers as well. This is because your free credit report is seen as a good illustration of your personal responsibility and reliability, which are factors that can help determine whether or not you are a credit risk, insurance risk, trustworthy employee or someone who will pay their rent and utility bills in a timely fashion.

Additionally, the information in your free credit report will be used by creditors of all kinds. Whether it is the credit department in your favorite store or online retailer, or a mortgage company, the information in the reports will be used to determine whether or not someone is a credit risk.

So, this all means that you should take advantage of your free annual copies and ensure that all of the information is accurate. This includes all address, employment and financial information. Should there be many errors or unfamiliar bits of information, act on it at once because it could be a serious indicator of fraud and identity theft.

If the information is correct, but clearly not of a positive or beneficial nature, there are things you can do to amend or improve the situation. For example, it is a good idea to go through all three versions of your free credit report and note every appearance of the phrase ?charge off?. This is an indicator that a creditor has tried to collect on a debt, but has finally given up and sold it to a collection agency. The charge off notices will remain on your report for seven years.

Many people who are trying to do some credit repair will actually create a calendar that notes the dates when certain items should be legally removed from the reports, and then when the dates arrive, they contact each of the bureaus (by phone AND in writing) to ensure that these derogatory items disappear immediately.

The free credit report will also show any delinquencies or late payments. Some creditors will gladly remove these items if the consumer contacts them directly and discusses the matter with them. If the account is still in delinquency, the consumer will have to get ?current? before the creditor will update the information to indicate the account is in an acceptable status.

Of course the information in a report is not as ?black and white? as that. For instance, someone with a chargeoff is probably going to see that same debt appear at least once more on their free credit report, but under the name of a different creditor. That is because the debt was sold and the new owner will be working to collect the amount due. In fact, the same debt can be sold and re-sold numerous times, which makes the credit score go lower and lower, and which means it is best to settle or negotiate with the owner.

How does a consumer do this? The report will show the debts by their dates, and the creditor with the earliest date is usually the owner of the actual debt and the only one who can eliminate it from the report. To begin the process of improving the free credit report, the consumer should contact the creditor by phone, and ALWAYS follow up in writing.

If the debt is less than $500 most financial experts recommend simply paying it off. The consumer should get a guarantee from the creditor that this will change the status of the debt to ?current? and eliminate all derogatory notices on the report. If it is more than $500 the amount due can usually be negotiated.

How does someone go about paying off these debts so quickly? If the consumer does not have the cash in hand, the best bet is to take a payday loan or cash advance. This is an easy way to get access to the funds necessary to begin cleaning up the free credit report. Additionally, most lenders of payday loans don?t look at consumer credit reports when lending money. If managed properly and repaid quickly, borrowing against a paycheck or two can be a great way to clean up credit and eliminate debts.