How to Check for Problems on Your Credit Report

Whether you want it or not, you automatically will get one, a credit report. All you need is a social security number associated with your name. Even a baby can have one. And throughout your entire life, any action that might have economic impact on you, will be recorded, evaluated, and rated. On a regular basis, the data accumulation is combined and analyzed through complex mathematical evaluations and computer programs. Only the company collecting and analyzing the information really knows the formula and reasoning taken into account. The final product is your credit score, or in other words your credit worthiness.

Why should you care about your credit score? Because your credit score is not just another number, it determines your life in many aspects. If you want to buy a car and get a loan, or buy a house and get a mortgage, if you need to borrow money from a respectable lender for any reason, this lender will request a copy of your credit report and the score the credit report agency has calculated for you. The information your lender will receive will determine whether you get the loan and at what rate. Even if you want to rent a home or apply for a new job, your success might depend on your credit worthiness.

You do everything right. You pay off your bills in time. If you already have obtained a loan, you pay or paid off your loan in a timely manner. You have a great sum of money in your savings and investment accounts. If you are financially well off, why should you have to worry about your credit report? Overall, your credit score should be outstanding, right? Wrong! A multitude of problems can be caused by errors on your credit report resulting in a low credit score due to no fault of your own. Therefore, it is important to regularly check your credit report for problems.

To check your credit report, you will have to contact one of the credit reporting agencies. These agencies keep track of all your financial activities with all banking, lending, and insurance institutions. They also track, what addresses you have been registered at, and what alternate names you might have used. Yes, essentially big brother is watching you. But sometimes data is reported or recorded inaccurately. Sometimes a loan, mortgage, or credit card has long been paid off and/or closed, but is still shown as open on your report. And unfortunately, sometimes a person will fall pray to identity theft. (http://www.associatedcontent.com/article/416804/steps_required_to_dispute_inaccurate.html)

A credit report can be requested for free through annualcreditreport.com. At this website you can check your credit report with the three major credit reporting agencies once a year for free. These agencies are Experian, Equifax, and Trans Union. It is advisable to alternate the institute you use and not check all three at once. This way, a credit report can be checked for free every four months, which allows for more opportunities to check for problems. (http://www.associatedcontent.com/article/416804/steps_required_to_dispute_inaccurate.html)

Unfortunately, the free reports will not provide you with a credit score or alert options, if new things are added to your report. Those options cost extra but might be worth the investment, if there had been problems with the report in the past.

Once you have obtained a copy of your credit report, you have to thoroughly check it for inaccurate information. Any information that is not yours or that appears to be unusual should stand out quite quickly. Also make sure that closed accounts show up as closed and paid off. And if you have disputed information on your credit report in the past, make sure it is properly documented.

Believe it or not, it is rather common that information from somebody else's file appears on a credit report. This is usually due to the fact that the person has a similar name or close social security number.

Sometimes the account information displayed is yours but it is inaccurate. Creditors not always provide timely or complete information to the credit report agencies. Therefore, an account might for example falsely show payment delays if in fact you have paid on time. Or an account might show up as open, if in fact it has been closed.

If you have had financial problems in the past and there is some negative information on your report, it should be taken off after seven years. Except for chapter 7 bankruptcies, creditors are not allowed to report negative account information for longer than seven years. You should make sure that old negative information has been cycled off your credit report.

Most importantly of course is to scan the report for signs of identity theft. If your credit report shows accounts that are not yours, they might be fraudulent, especially, if your name and social security number was used to open up the account.

If you find inaccurate information on your account, you will have to take certain steps to dispute them and to clean up your credit report. If you suspect identity theft, you should also get the police involved. Information on how to dispute inaccurate information on your credit report can be found here: http://www.associatedcontent.com/article/416804/steps_required_to_dispute_inaccurate.html