What Do Credit Reports Mean To You?

by Michael Geoffrey

Some people find themselves with a messy financial situation and therefore credit reports are not a pleasant topic. However, credit reports provide you with the facts. And even if the information is undesirable it can be like a helpful guide on your road to financial recovery. Being well informed is important and necessary information can be found in your credit report.

In the United States, credit reports are complied by three major agencies: Equifax (PO Box 740241, Atlanta, GA 30374; www.equifax.com), Experian (PO Box 2002, Allen TX 75013, www.experian.com) and TransUnion (PO Box 2000, Chester, PA 19022; www.transunion.com).

The reports contain a multi-year history of your credit cards, home loans and other debt. They also record any late payments that occurred and how late they were, 30-day past due, 60-day past due, etc. The reports will list any current and old address, and often your phone number and social security number.

That information is readily available to any qualified party – a bank, a mortgage lender, a credit card issuing company and certain others during legal proceedings. But, though the companies all genuinely try to maintain accurate records, the reports may contain errors.

Errors are sometimes made in recording payments made to bring a past due balance current. At times your credit report will list loans as active or credit cards as open that you have closed out or paid off some time ago. There are many different computer systems operating out there that may not always transmit information one to another accurately or in a timely manner. That leads to reporting errors.

The only thing an individual can do about this – out of self-protection, if nothing else – is to get copies from all three agencies and review them thoroughly. Make a note of any errors, establish proof of the error, then send a registered letter with the proof to the agency asking them to correct the data.

Thanks to recent legislation, you can obtain one free copy of your credit report per year. There are numerous ways to do that by filling out a form online or calling. One way is to go to: annualcreditreport.com.

Knowing your current credit status can help you game plan for your financial future. A knowledge of your credit history can be instrumental in helping you set goals to eliminate your debt and avoid unnecessary debt in the future.

Review your history and note any current overdue amounts. Clear those up first, as quickly as possible. One method is to pay off any smaller outstanding amounts first. That frees up funds to be used on the next larger outstanding amount. Working your way up, you will eventually begin to see light at the end of the tunnel.

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