Imagine a document that determines if you are offered a job, if you can move
into an apartment, if you can open a checking account, and even if you can
get insurance.
That document is called your Consumer Report, or better known as your credit
report. This lovely little collection of personal spending habits is being
used by more and more institutions -- not just credit card companies. The
report contains details on where you've lived and worked, your payment history,
whether you have declared bankruptcy, even whether you've been sued or thrown
in the slammer.
For the most part, there are four instances when you'll pray your credit
report is clean as a nun's rap sheet: When you apply for a loan or credit,
when you apply for certain types of insurance, when you apply for certain
jobs, and when you apply for housing (either to rent or for a loan to purchase).
The strange thing is that even though by law people have a right to see what
is in their file (and correct erroneous information), they rarely do until
it is too late. You, Fool, should check your credit report at least once
every two years to make sure that everything on it is accurate.
Here's how you do it: First, you'll need a copy of it. The "Big Three" credit reporting agencies are Experian, Equifax, and Trans Union. You can order your credit report from each agency individually -- or order from all three agencies in one easy step at TrueCredit.com. Before you go ahead and request a report, we suggest you check out A Fool's Guide to Credit Scoring for an overview of the credit scoring process and tips on how to maximize your credit score.
If it turns out your record is less than squeaky clean, we've got some tips on how you can get your financial house back in order. What happens if, on the other hand, the information you have about your credit history and your official credit report don't match up? In order to bring databases up-to-date, you will typically be asked to mail the following: A photocopy of a paycheck stub showing current employer, address and Social Security number or a Social Security Card, a photocopy of a valid driver's license or other photo ID, and all the information needed to bring your report up to date.
Credit reporting agencies can charge no more than $8 for providing you with
a copy of your report, and under some circumstances they must provide it
for free. There's no charge if you've been denied credit, insurance, or
employment because of your report, though you must request the report within
60 days of having received notice. Also if you are on welfare, unemployed
and plan to look for a job within 60 days, or believe your report is inaccurate
due to fraud, you are entitled to a free report.
Avoiding obtaining a copy of your credit report is sort of like avoiding
the dentist, it will eventually come back to haunt you. It is also the first
step in guaranteeing a long and happy credit history, where the words "credit
report" do not have to be whispered.
As we mentioned before, there are a lot
of companies that would like to help you clean up your credit report. It
is worth repeating here -- only two things will improve a bad credit record:
time and re-established credit. Get your own credit report and do it
yourself, Fool.
See Also