By: Jennifer L. Lopez, Debt.com Financial Fitness Trainer
Consider your credit as a garden. If you tend to it and do the necessary work, it will provide you with much opportunity for joy and the reward of a good reputation. If you let it get overgrown with weeds and fail to provide the caretaking that is needed to make it look good, the garden will cast a negative light on the exterior of your home, and others will think less of you because of your negligence.
The same concepts can apply to your credit report, and since everyone has one, it is vital that consumers know what a credit report is, and how to nurture, protect, and repair it.
What is your credit report? Your credit report is a listing of all of your credit-related transactions, including loans, credit cards, bills, mortgages, and financial-related court actions. Most of this data is reported by the companies themselves. Both positive and negative actions are documented, and help to determine the final number of your calculated numerical credit score. As transactions change, your credit score also can change.
Why are credit reports/ scores important? Creditors use this information to determine your financial fitness, and therefore, whether or not you are a good credit risk. Credit scores can be used by credit card lenders, mortgage companies, utility companies, insurance companies, landlords, and even employers to determine what kind of person you are, and if they want to do business with you.
How can I find out how what is on my credit report? There are normally 3 credit reporting agencies that compile credit report information: Equifax, TransUnion, and Experian. Though these companies hold the information, they do not determine what shows up—the information is reported by lenders that do business with you.
By law, consumers are able to request one free credit report every 12 months by going to the Annual Credit Report website. In addition, consumers that are denied credit are typically notified by the creditor of the decision and what credit reporting bureau was used to make the decision. The consumer is then able to request a free copy of their credit report to see what adverse information caused them to receive a denial.
How do I find out what my numerical credit score is? The free yearly credit report does not include a credit score. A consumer must normally pay extra to receive their credit score. However, you can have constant access to your credit score through a website called Credit Karma. Unlike many of the other subscription credit report companies, Credit Karma provides your credit report and credit score for free on an ongoing basis.
What makes my credit bad? Late payments, missed payments, going over your credit limit, and bankruptcies, liens, and foreclosures are just some of the things that can tarnish your credit. Other more unexpected strikes against you can include not have any established credit accounts, never using your credit cards, cancelling open accounts, and transactions recorded in error by the lender or credit bureau or as a result of identity theft. In the garden of your credit, you should consider these negatives as weeds that need to be pulled sooner rather than later in order to avoid long-term damage.
How can I repair my credit? Pay your bills on time, including at least minimums on credit cards, avoid applying for an excessive amount of new accounts within a short amount of time, use credit reasonably without getting too close to or surpassing credit limits, avoid closing accounts, avoid adverse legal actions, like foreclosures and bankruptcies, and review your credit report periodically to confirm that all noted items are correct and up to date.
What should I do if something is incorrect on my credit report? If you find inaccurate information on your report, you can dispute it by phone, mail or online with the credit bureau that has it listed. You will need to specify the information in question, why you think it is incorrect, and provide proof of the correct information if you have it. The credit bureau will investigate it further, and provide you with a decision within a couple of weeks.
Just like a good gardener does not simply plant some seeds and never go back again to check their progress, a wise consumer should take the time to inform himself of credit basics, strive to take the actions necessary to keep his credit up, and monitor his credit report on an ongoing basis to prevent nasty “weeds” from cropping up to kill what is good.
How does YOUR garden grow?
Excellent information, neat website design, stick to the good work
Good point. I hadn’t touhght about it quite that way.
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