Learn all about credit reports, how they can impact your financial life, and what to do if there is a problem with your credit file. Understanding these things is key to ensuring your financial future is on track.
If you’ve been following the Credit Reports series, you probably know the ins and outs of credit reports. You are a complete pro by now! If you have missed part one, be sure to check it out. The last Credit Reports article covered the details concerning what is listed on your credit report and the easiest way for you to get a copy of your credit report.
How Your Credit Report Can Impact Your Life
Credit reports can play a huge role in your life, especially when it comes to your financial future. You might wish to purchase a home or new vehicle. This typically will require a mortgage or automobile loan from a financial institution like a bank. If your credit report shows that you have poor credit, you might not be able to get financed for the amount of your mortgage.
Credit reports can also impact other aspects of your life. Namely, your credit score is what is important, but this is reported on your credit report. Various accounts determine your eligibility based on your credit score. You might be able to secure a credit card with poor credit, but you will possibly have a big interest rate on that credit card.
If you accumulate credit card debt, you will most certainly want to ensure you have good interest rates. As your debt accumulates, you will have to pay a certain amount each month – an amount that includes a portion that goes toward the interest on each credit card. If you have multiple credit cards, it is best to pay them off as soon as possible.
It can be beneficial to pay off the smallest balances first, but typically, you will save the most money in the long run if you pay off the credit cards with the highest interest rates first. The sooner you get those credit cards out of your life, the better your financial future will look. If possible, do not accumulate a great deal of credit card debt.
Credit reports can also be impacted by inquiries, as mentioned in the previous Credit Reports article. Credit card inquiries can be quite frustrating, as they do impact your credit score and often cannot be controlled. Various bills that you pay, such as your cellular phone and utility companies, have entities that can check your credit report from time to time.
How to Improve Your Credit Report: Reporting an Issue
If you have negative information on your credit report, you will want to improve your credit score as soon as you possibly can. If there is incorrect information on your credit report, you should report it to the credit bureaus as soon as you notice it. For this reason, it is smart to get a free copy of your credit report at least once a year.
According to the Fair Credit Reporting Act, you can dispute information on your credit report if it is incomplete or inaccurate. Ask the credit bureau to research the issue or further investigate the problem you have noticed on your credit report.
If you find their investigation to be inadequate, you are permitted to file a statement on your credit file, explaining the problem you have found on your credit report. The statement will have to be brief (100 words or less), and it will become a permanent part of your credit file, provided the negative information continues to be listed on your credit report.
Since you are only permitted 100 words to explain the problem on your credit file, you should think about your summary statement well before you submit it. Make sure your statement is all facts that you can prove if you need to, and keep in mind that you need to keep it brief. You will want to back up your information with facts and keep these facts handy at all times.
How to Improve Your Credit Report: Improve Your Credit Score
Most people do wish to have a great credit report, but this is because they want to have a fantastic credit score. This way, they are able to finance boats, vehicles, homes, or other large purchases. Also, with a great credit score, you can acquire credit cards or other financial instruments that are needed to afford the things you wish to purchase.
If you acquire credit cards, be sure to pay the minimum balance when it is due. You will want to pay it off quickly in order to avoid interest. However, a regular payment to a financial institution does show you are responsible and able to pay off debt when you have it. This will bode well with financial institutions that are considering working with you.
It is also a smart idea not to apply for many credit cards all at the same time. While it can be tempting to apply for many credit cards or lines of credit when your credit score is doing well, it can be detrimental to your credit file. This is because it shows too many inquiries into your credit file at the same time. Rather, apply for one every once in a while, rather than all at once.
Do not forget to file for your free credit report once a year, as this will inform you as to the status of your credit score and the information on your credit report. If there is any incorrect information, quickly resolve the problems with the credit bureau or file a brief statement on your credit file, as instructed above.
If you are concerned about your financial future or the credit reports that are available to you, work with a business consultant to resolve any issues.
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