What to do with a Free Credit Report


While some individuals understand just how pertinent it is to have good credit, others do not fully realize the power that credit, both good and bad possesses. Anyone wanting to buy a home, car, boat, or secure a credit card, and in some cases, be considered for a job, needs to have good credit. This means that in addition to creditors looking at a person?s credit history to determine financial responsibility this report is also considered pertaining to work. The best thing a person can do is order a copy of his or her free credit report to make sure there are no errors.

Simply put, obtaining a copy of the free credit report cannot be understated. While having good credit is always important, it is especially vital due to the current economy. Because of the economic market, lenders now have stricter guidelines for home buying, credit card companies are being more particular, employers want to make sure they are getting the best person for the job, and even filing for bankruptcy as a means of getting out of debt is a lot harder.

With so many people being affected by the economic crunch, this means that more people are now at risk for their credit report and standing. Interestingly, many people that believe they have great credit are getting the surprise of a lifetime after ordering a copy of their free credit report. Looking over the information being reported carefully, these people are finding not only mistakes, but also inaccuracies, omissions, and even inquiries never authorized.

With a free credit report, each person would have the opportunity to review the four different categories. These areas of the report include a person?s personal information, credit history, public records that would show level of financial stability, and third-party inquiries. This means when going through the free credit report, people have significant information to review, which takes a little time and effort to complete.

In summary, the free credit report is an overview of a person?s financial stability, as well as credit history. The report would contain all types of information regarding financial transactions such as loans to include cars, personal, payday, etc, mortgages, credit cards, and collections. In addition, the free credit report would provide creditors with information for each of these entries regarding payment history, over limit history, defaults, and so on.

One area of the free credit report that is often misunderstood and overlooked is inquiries. Inquiries are third-party creditor or lender requests for a person?s credit report to be obtained. However, for these reports to be run, the individual of the report would have to provide authorization, which would be verbal or a written agreement such as application for a loan or credit card. If the free credit report shows numerous inquiries it makes it appear to creditors that the individual is hard up for cash and trying to get money from a number of different resources.

For this reason, as people go through their free credit report looking for inaccuracies, they also need to look at inquiries. They should be able to identify each inquiry being reported and know if it was or was not authorized. If there were inquiries on the report that should not be there, perhaps from credit card companies wanting to send out a free offer without the individual knowing, credit bureaus would need to be notified. Again, excessive inquiries found on the free credit report would be considered negative.

Mistakes and inaccuracies found on the free credit report would also need to be identified. This would include anything such as bank or credit card accounts being reported that were ordered for removal through the court, as the result of a divorce or death, accounts that were paid off in full but still showing as open, and wrong balances. Although some of these might not have much impact on the person?s FICO score, many of them could.

Omissions on the free credit report are also very important, both good and bad. As an example, if an individual has an account, whether opened, closed, with a balance or without a balance but not being reported, it would have an effect on scoring. For an account paid off in full or one with a low balance and in great standing but not listed on the free credit report, the individual is missing an opportunity for the score to increase. On the other side, if the report were past due and not being reported, it should still be on the report but in this case, it would lower the score.

Obtaining a copy of the free credit report once a year gives people a chance to make corrections initially but then to stay current on future mistakes. One simple mistake or omission, or too many inquiries being reported on a person?s free credit report is all it would take to throw everything off, which is why this report is so critical.