Credit Report Basics

Are you in the dark about your credit report? Getting in the loop is to your benefit. Read on to learn what credit reports are, how you can establish a credit history, and how to repair credit problems.

What is a Credit Report?

Your credit report gives you your credit rating. It lists all of your outstanding loans and debts (including credit cards), as well as any information about debt default. You may think your credit is in fine standing because you *eventually* pay off your bills, but each time you're late, your lateness appears on your credit report. You'll feel the effects of a good or bad credit standing when you apply for an apartment lease, a mortgage, or any other loan. A good credit rating will go a long way toward assuring you a space in your dream apartment or a plot of land that's all your own. 

Establishing Credit

If you've never had a credit card, it may behoove you to get one just to establish credit. If you don't qualify for a bank's credit card, apply for a department store card (they have much lower standards for successful applicants). Keep in mind that if each of you has credit cards in your own names, you each have your own credit report. If you have any joint cards, the card will appear on both of your reports. 

Hot tip: Keep one loan or credit card in each of your names, so each of you establishes your own credit history. This way, if one spouse dies or you divorce, you won't have any trouble maintaining or using your credit. 

Your Credit Report 

If you're interested in seeing your credit report, you can order a copy from any one of three major credit-reporting agencies. There are certain circumstances, including denial of credit within the past 30 days, in which federal law states they must give you a free copy of your credit report. You can also request a report directly from Experian at (888) 397-3742, Equifax at (800) 685-1111, or TransUnion at (800) 888-4213. 

Correcting Your Credit Report

If you see anything you don't recognize on your credit report, someone may be using your credit information for fraudulent purposes. Notify the credit bureau at once and call any creditors that filed complaints or incorrect information. The credit bureau can attach a fraud statement to your report and let you know which creditors to notify, and a creditor can notify credit bureaus that the information is incorrect. Keep track of your efforts in writing. According to federal law, the credit bureau and any creditor that filed incorrect information must resolve the issue within 30 days. 
For more information, check out the Electronic Credit Repair Website, which offers a very detailed explanation of how to repair credit problems. 

What If You Have Bad Credit? 

If you've racked up a lot of debt, missed payments, or made late payments, there's no way to erase this information from your credit record. Any late payment can stay on your credit rating for up to seven years, even if you've completely paid off the creditor. What you can do is take stock of your money matters and start working to pay off your debts. If you start keeping meticulous financial records and paying off all your debts on time now, your credit rating should be golden in a few years.