ComparedForMe.com, has compiled a list of the frequently asked questions consumers are asking, both broad and specific, about credit reports. Whether you know a lot about credit reports or feel like you’re just learning, use this post as a reference to see which questions consumers like you want answered.
Q: What is my credit report and why is it important?
A: Your credit report is a numeric representation of your credit history. Ranging anywhere from 350 to 850, it gives people an idea of your payment history, your level of debt, and how likely you are to pay your bills in the future. The higher the score, the better!
Q: How do I obtain my credit report?
A: You can obtain your credit report from any one of the three major credit bureaus: Experian, Equifax, or TransUnion. Every consumer is entitled to one free credit report per year. Click here for a free online credit report.
Q: Who will look at my credit report?
A: When you apply for a loan, purchase a house, buy a car, apply for an apartment or apply for a job, the person you are dealing with will definitely want to pull your credit report. Viewing your credit report, which contains your credit score, provides the loan officer or potential employer with a trustworthy snapshot of your financial history. The better your credit score, the lower the risk that person or company is taking by doing business with you.
Q: How do I correct errors on my credit report?
A: It is important to note that there is always a possibility that errors may appear on your credit report. After carefully reading through your credit report, you find an error—what do you do? Your best bet is directly contacting the credit bureau who produced the credit report (Experian, Equifax, or TransUnion). If you do so by mail, keep a copy of all communication you have with them for your records. Upon receiving your inquiry regarding the error, the credit bureau will begin investigating. This process can take up to 30 days, so be patient—but stay on them if you don’t hear back in a timely fashion. Don’t be shy—this is your credit we’re talking about!
Q: Why am I entitled to one free credit report per year?
A: You can thank the “FACT Act” for your annual free credit report. The “Fair and Accurate Credit Transactions” Act was passed in 2003. In response to its passing, the three major credit bureaus worked with the Federal Trade Commission to set up the website https://www.annualcreditreport.com as a central place to obtain this free credit report.
Q: What is a “good” credit score?
A: A “good” credit score is 700 or above. The average American consumer has a credit score of approximately 680, to give you some perspective. Remember, the higher the credit score, the better. If your credit score is anywhere in the 800’s, you are doing an excellent job!
Q: What is a “bad” credit score?
A: If your credit score is 680 or below, you probably have some work to do. Make sure you keep up with your monthly payments. Also, evaluate your spending habits—if you have to pull out your credit card, ask yourself, “Do I really need to buy this?”
Q: What rights do I have if I am denied credit?
A: If you are applying for a loan or are looking to buy a house, your credit report will most definitely be pulled. If you happen to be denied as a result of your credit score, it is important to know your rights. You have the right to ask the company who denied your application to supply you with the name of the Consumer Reporting Agency (CRA) from which they pulled your report. As mentioned above, the FACT Act (Fair and Accurate Credit Transactions Act) is in place to give you the consumer the rights you deserve.
Q: What can I do to improve my credit score?
A: Improving your credit score is a simple equation. Pay your monthly payments on time—if you cannot pay large sums each month to chip away at your balance, it is crucial that you pay at least your minimum payment, as directed by the credit card company. Also, we cannot stress the importance of curbing your spending habits enough. During these tough economic times, every consumer must take an active role in limiting their credit card usage. If you can’t pay for it on the spot, think twice about whether you really need it!
