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Educational Consumer Tips

Credit Report-Understanding Your Credit Report

Author: Better Business Bureau
Category: Finance

Although creditors usually consider a number of factors in deciding whether to grant credit, most rely heavily on your credit history. To learn how you have handled credit in the past, most creditors purchase a report from your local credit bureau.Your credit bureau report is based on information regularly reported to the bureau by the retailers and creditors with whom you have credit cards, a loan, or other financial dealings. It also contains matters of public record, such as bankruptcy, and court judgments against you.Under the Fair Credit Reporting Act, if you apply for a loan, and are turned down because of information contained in your credit bureau report, the creditor must identify the credit bureau involved.

 At your request, which can be made by mail or in person, the credit bureau must provide a summary of your credit file. If you act within 30 days of being denied credit, there is no charge for this service.You have the right to dispute any information in your credit record that you consider inaccurate, outdated, or incomplete. To register your objection, write the credit bureau, explaining why you believe the information is incorrect.Unless your dispute is frivolous or irrelevant, the credit bureau must reinvestigate the matter, and delete the information from your report, if it cannot verify the disputed facts.

If you disagree with the results of the reinvestigation, you are entitled to write a brief statement explaining your side of the story. Your statement will become part of your credit bureau report.If the negative information in your report is accurate, however, only time can ensure its removal. Credit bureaus are generally permitted to report bankruptcies for 10 years, and other negative information for 7 years. There is nothing that you (or anyone else) can do to remove accurate information from your credit file, unless the reporting period has expired. Do not be mislead by "credit repair" ads aimed at persons with bad credit histories, judgments, or bankruptcies. Promises to "repair" or "clean up" a bad credit history can almost never be kept.

Tips to Remember·         
Credit can be a valuable convenience. It can also become a heavy burden on the consumer who used it indiscriminately.·         
Following are some early signs of a credit situation that may be headed for trouble:·         
Not paying your bills on time, or juggling bill-paying each month;·        
Making only minimum payments on large credit card bills;·         
Not knowing how much you owe; ·         
Regularly using your overdraft credit on your checking account to pay bills;·         
Living up to your income, without saving anything for emergencies; and·         
Being denied credit because of negative credit report.·         
If you recognize one or more of these warning signs, the following guidelines may help you get back on track:·         
Analyze where your money is going.
Establish a budget and stick to it.·        

Contact your creditors if you are facing temporary problems in making payments.
They may be willing to work out a modified payment plan that reduces payments to a more manageable level. If you are thinking about turning to a company that offers debt consolidation loans, debt counseling, or debt reorganization, investigate the company thoroughly before signing any agreement. Check the company's reliability record with the local Better Business Bureau, and your state, or local consumer protection office.And, remember that some businesses offering debt "relief" charge substantial fees, but fail to follow through on the services they provide. Be certain you understand exactly what services the business provides, and what they will cost you. Do not rely on oral promises that are not spelled out in a written contract.If you need help in dealing with a severe or potentially long-term debt problems, you may want to contact your local, non-profit, Consumer Credit Counseling Service (CCCS). Counselors with the CCCS will try to work out a repayment plan that is acceptable to you and your creditors, and will also help you set up a detailed and realistic budget. Their services are offered free, or for a minimal charge.