For most people, their credit score is something that they only think about when they are applying for a loan or credit of some type and they suddenly realize that they don’t know what their credit score is.

They realize that they don’t even know if it will prevent them from getting the financial help that they need and are asking for.Many people do not realize the importance of their credit score, but it can influence everything about financing and a surprising number of other things in our lives.It can affect their ability to borrow money or obtain credit cards, obviously. It can also influence the interest rate that they are offered if they do qualify for a loan. The surprise is in the other things that can be affected by your credit score – things like getting a cellphone, getting a utility account (electricity or natural gas, for example), getting life insurance or home insurance, or even renting a place to live. The things that can be affected by the strength of your credit score are many now, and will be even more in the future.
Credit Report
That is why it is important to understand what your credit score is, what affects it both positively and negatively, and how to keep your credit score as healthy as possible.

The first step in learning about your credit score is to get your credit report. You can do this by asking for a free credit report from one of the companies that keeps track of everyone’s credit scores. The three largest companies involved are Equifax, Experian, and Trans-Union. There are other companies that also compile credit scores, but those are the three largest. You are entitled to receive one free credit report in any twelve-month period through You must understand, however, that you can get your report at no charge, but you cannot get your credit score without paying. You can order your credit score as an add-on when you request your free credit report, but you must pay a fee for it. These are the rules in the United States – for those in other countries you will need to do some research to find out what the rules are in your country. You should always order a free credit report from each of the three main reporting companies, because they may not all have the same information on them.

Once you get your credit report, the first thing you should do is make sure your name, address, and all other identifying information is correct. If there are errors, or information that is questionable, it can sometimes be caused by simple errors, but can also be caused by something more serious, such as identity theft. It is best to check with the reporting company if you have questions about your identifying information. Next comes the financial information. Carefully check each block of information and make sure it is accurate. For example, the credit report will detail every loan, utility account, telephone account, credit card, and mortgage that you have, and will state the name of the bank or company that you deal with, your account number with that institution, the type of credit that you have with the company, when you opened that account, the monthly payment if there is one, the current balance of the account, the terms of the loan, if applicable, the credit limit, what amount, if any, is overdue on the account, and any other information that is pertinent to that account.

It is important to check each item of information and make sure that it is accurate. It is the responsibility of the lender or the company that has extended credit to report all the pertinent information to the credit agency. Ideally, this would always happen accurately and in a timely manner, but mistakes do happen. The important thing is to identify these mistakes and have them corrected before they negatively affect your life. If you do find an error in your credit report and want that error corrected, you must contact the credit reporting company in writing and tell them what information is not accurate. You will need to provide supporting documentation (copies of receipts for bill that have been paid, copies of bank records, or whatever you have) that can prove that an error has been made. You can include a copy of your credit report with the offending item(s) circled or highlighted, so that it is immediately clear which item(s) you are disputing. The credit reporting company is required by law to investigate your complaint, and in most states there is a 30 day time limit for them to take action. They must forward all of the information that you sent them to the company that gave them the wrong information, as well. This company must review the information and check their records, and if there has been an error, then they must notify all three of the largest credit reporting companies and ask to have the information corrected in your file. Remember that the credit reporting company must send you the results of the investigation in writing, and if there was a mistake in your file and the file then had to be corrected, you are also entitled to another free copy of your credit report that shows the correct information.

Another thing that you must check for in your credit report is identity theft. Make sure that every account and loan detailed on your credit report is indeed yours. There are far too many instances of identity theft that go unnoticed and unreported because the victim has no way of knowing what has happened. Getting your free credit report once a year can allow you to make sure that you are not paying the price for someone else’s actions. If you do detect fraudulent activity in any of your financial accounts or in your credit report, besides taking steps to protect yourself and not end up paying for the crime, you must also put a fraud alert on your account with each of the three main credit reporting agencies. This will alert all of the agencies that you deal with that they must take extra steps to verify your identity before granting access to any of your accounts, and they must also keep a sharp eye out for any unusual or suspicious activity on any of your accounts.

Your credit report will include information that is not strictly financial, but would impact your financial dealings, such as if you have been sued, if you have a tax lien, or if you have a criminal record. It also shows if you have filed for bankruptcy. All of these pieces of information can have a negative effect on any financial dealings where your credit report is checked, and if the information is true, there is no way for you to have those items removed from your credit report. The only thing that will erase these detrimental facts is time. Your basic financial information is only kept for seven years, as is information about a lawsuit against you or any kind of legal judgement against you. If you have filed for bankruptcy, that information will appear on your credit report for 10 years. Any tax liens that have not been paid in full will continue to appear on your credit report for 15 years. You should keep track of the time, as well, so that if the information is not promptly removed from your credit report when the deadline has passed, you can contact the credit reporting agency and report the error. Equifax, Experian, and Trans-Union will all need to be contacted, so that you can be sure the information is truly gone from your reports, no matter what source is used.

If you choose to pay the fee and get your credit score at the same time as your credit report, you will be able to see how the information on the credit report is reflected by the credit score. The higher your credit score, the more likely you are to be offered credit, while a lower score could result in refusal of credit or other services.

There are many good resources for learning how to read and interpret credit reports, what your credit score means, and what the laws are that govern credit reporting and associated services, and it is a good idea to access these resources and learn as much as you can about the rules that apply to you, so that you can make the best possible financial decisions in the future.

One of the subjects that is not taught in schools is financial literacy, and that omission leads to a world full of people who do not have enough education about money management to guard against money mistakes.

That is the reason so many people have so many financial problems when it comes to credit and how it works. One of the best things you can do for yourself and your family is to take a course on basic money management at a local college, and make sure that your children take that same kind of course before they get their first credit card or loan. If the general population was better educated when it came to managing their money, many of the scams that fool us into spending our money foolishly would not work, and we would save ourselves a lot of aggravation, as well as money.

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