Your credit report: Knowing is half the battle
Your credit score can either be a badge of honor or a dark cloud over your head. Good credit gets you low rates on mortgages, low rates on auto loans, and any credit card that you choose. Bad credit gets you turned down for mortgages, sky-high interest rates on auto loans, and secured credit cards that are worse than the terms that a loan shark would give. Nowadays employers, the military, and even your children’s private school may request a copy of your credit report.
If you are reading this blog, then most likely you are shopping for a home. If you do not know if your credit is good enough to buy a home, now is the time to check your report. I have had many people call me who had been shopping for homes online for months without having their credit checked. Some of them were quite surprised to find items on their credit report that they did not recognize. Some of these were negative items, often referred to as “derogs” (short for derogatory.) In some cases these potential buyers were unable to get the lowest rate, or even worse get approved at all.
There are so many websites and so many people that want to tell you how to have great credit. Many of them are confusing, and many of them are contradictory. I prefer to keep things simple, start by getting a copy of your report. In my opinion annualcreditreport.com is the best site on the internet to get a free copy of your report. Take a good long look at the report and ask yourself the following questions:
1) Do I recognize every account?
This happens more than you may think. It is one thing to have a derog on your report if you are at fault; it is another if it is not. If you believe that an account on your report does not belong to you, follow the instructions on annualcreditreport.com to dispute it.
2) Should this old debt STILL be on my report?
Old collection accounts and tax liens should only be on your report for seven years since their last activity. Are they older than this? Dispute them.
3) Was I really late on my bill that month?
I recently had a woman come to me with a credit report that stated that she was four payments behind on her credit card last year. This was during the time that she was having a charge reversed to a merchant who charged her for merchandise that she never received. She disputed it, the lateness was corrected.
The best part about your credit report is it tells you how to improve it! Somewhere at the top or the bottom of every report is a list of the four things that you can do to improve your score. These are not generic suggestions; these are suggestions that are customized to you based upon your report. The worst thing that you can do when the stock market is down is to not open your monthly statements. The worst thing you can do when you fear that your credit score is down is to not look at your report. Until you know what is on your report, you will never know how to improve it.
Submitted by: Jason Infanti
For further assistance contact Jason via email: Jason@JohnLuca.com or phone: 302-999-6940 referencing his blog article
