Information Contained in Your Credit Report Can Help You Become Debt-Free

March 13, 2009 by  
Filed under Credit Reports

Some people tend to get a little queasy when mentioning their credit score and report; this is especially true if they are aware of negative information contained in it. However, everyone should have knowledge of what is in their report as part of a long-standing debt management program.

TransUnion, Equifax and Experian are the three credit reporting agencies used by creditors, and each may contain different information that may or may not be accurate. Each year, you should request your free copy from these agencies to closely examine the information within them.

Your reports will contain information about nearly every account, credit card, auto loan or home loan you have held in the past. Collections, liens, student loans and owed taxes may also be included.

When you first receive your credit reports, you need to go through them with a fine-toothed comb to ensure all information is correct. You’ll want to look at the payment history recorded, current balances/overdue amounts, and keep an eye out for accounts you were not aware of.

Accounts filed on your report that are not yours are the first indication of identity theft, and need to be dealt with immediately. This is why it’s a good idea to monitor your credit reports on a regular basis. Identity theft can ruin your credit score, cause you to owe debt that is not yours, and keep you from getting much-needed loans in the future.

You will also notice that your address and other personal identifying information will be included on the reports. Any incorrect information in this area may lend clues to mistakes on your report as well.

Making a list of all incorrect information on your report is the first step to creating a personal debt management program. You should immediately submit a written dispute for each incorrect piece of information on your reports, and send them to each corresponding agency. If this information is not validated by the debtor within a 30-day period, the agency is required to remove it from your credit report.

Next, in order to significantly raise your credit score, you’ll want to create a personal debt management solution by highlighting collections, judgments, liens and current credit card debt and other debt. Start by contacting the collection agencies and ask for a settlement on the old debt.

After old unpaid debts are eliminated, determine how much in extra funds you will be able to apply toward outstanding credit cards and loans. Unsecured debts should be paid down or off before seeking additional credit lines from your bank or other financial institution.

Put this extra amount of money toward the highest interest rate loan or credit card first, until it is paid off; then, move to the next highest rate. Any creditors reporting your history as late should be addressed immediately as well.

Understanding your credit report and maintaining awareness of what creditors report is the first step in creating any personal debt management program. You must be aware of what’s included in your reports before pursuing additional credit for any purchase; this allows for the best possible rate and terms available.

Your credit score ratings are very essential – and you need to check your credit report to make sure that the information in it is correct. You can get all three credit reports and get free credit score online – so your credit rating score is only a click away.

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