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Mistakes Happen Why Checking your Credit Report Often is ImportantWhen a credit report contains errors, it is often because the report is incomplete, or contains information about someone else. This typically happens because: The person applied for credit under different names (Robert Jones, Bob Jones, etc.). Someone made a clerical error in reading or entering name or address information from a hand-written application. The person gave an inaccurate Social Security number, or the lender misread the number. Loan or credit card payments were inadvertently applied to the wrong account.
Some incorrect data, however, is an indication that you have been the victim of fraud or identity theft (for example, someone has applied for credit in your name or used your credit without your permission). It's crucial that you catch these mistakes and take action to fix the data on your report.
Every time you apply for credit, you're
giving lenders permission to see your credit report. And other creditors with a qualified purpose such as sending you a pre-approved credit card offer can check your report without your permission. So shouldn't you see what they're seeing?
Be proactive and check your credit report on a regular basis. Not only will you be better prepared for negotiations with lenders, you can also get early warning signs of fraud.
You should review your credit report from the three major U.S. credit reporting agencies (Equifax, Experian, and TransUnion): At least once a year and especially before making a large purchase, like a house or a car.
Credit agencies charge a small fee for reports. However, you are entitled to one free credit report from each of the three major credit agencies once a year. You must order your free credit reports through www.annualcreditreport.com. In addition, youre entitled to a free report. These times include within 60 days of being denied credit, insurance, or employment or if youre on welfare or if your report is inaccurate because of fraud, including identity theft.
If you find an error, fill out the dispute form provided by the credit-reporting agency. The credit-reporting agency must investigate and respond to you within 30 days. You can get your credit report from many sources, but only the credit agencies can actually correct the data on your report. Contact the three major credit agencies directly.
If you are in the process of applying for a loan, immediately notify your lender of any incorrect information in your report. Your lender will need to reorder your credit report and score once any changes have been made to your information at the credit-reporting agency. Fixing small errors may have little or no effect on your score, but correcting significant errors may have a much more meaningful impact.
Although each credit reporting agency formats and reports information differently, all credit reports contain basically the same categories of information: Your name, address, Social Security number, date of birth, and employment information are used to identify you. These factors are not used in scoring. Updates to this information come from information you supply to lenders.
Lenders report on each account you have established with them including; The type of account (credit card, auto loan, mortgage, etc.), the date you opened the account, your credit limit or original loan amount, and your account balance. Even if you pay off your credit cards in full each month, your report may show a balance on those cards (generally the total balance of your last statement). It will also include your payment history. Late payments stay on your report for seven years and finally it will list all closed accounts.
When you apply for a loan, you authorize your lender to obtain a copy of your credit report. This is how inquiries appear on your credit report. The inquiries section contains a list of everyone who accessed your credit report within the last two years.
The report you see lists both "voluntary" inquiries, spurred by your own requests for credit, and "involuntary" inquiries, such as when lenders order your report to offer you a pre-approved credit offer through the mail. Self-inquiries and involuntary inquiries are not factored into your credit score.
It is for the above reference reasons that checking your credit report often is so important.
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