Credit Reports

You often hear about the importance of maintaining good credit so that negative information won't be reported to the three credit bureaus, but what are they and how do they affect you? They are major players in the credit world and have a huge affect on your everyday life, which is why it's important to understand the role of the credit bureaus. You definitely don't want a lack of knowledge to have a negative effect on your day-to-day life.

Lets take a deeper dive into what the credit bureaus are and how they affect you...

What They Are?:

There are three major credit bureaus, also known as credit reporting agencies, in the United States; they are Experian, Equifax, and TransUnion. While they offer many services to the public and companies that seek consumer information, they are mostly important to you because they collect all of your credit information (who you have credit accounts with, how you manage payments,howlong your accounts have been open,whether you have defaulted, etc.) and compile it into reports consistently. While they help you by allowing you to see what's on your report (once a year for free and for a fee afterward), their main business is providing consumer credit information to banks, credit card companies, employers, prospective landlords, lenders and more.

The Credit Score

While the information in your credit report is extremely important to those requesting information, the credit score is even more important. The one important credit score that most lenders use to determine whether they will lend you money or credit is the FICO score. The FICO score is developed by the Fair Issac Corporation and takes data from the 3 credit bureaus to determine your credit score. By taking the information in your credit report, they determine a credit rating to help lenders quickly judge whether you're a credit risk. FICO scores generally range from 350 to 850; and if your score is lower than 620, you are typically thought of as a bad risk - which will make it difficult for you when you are trying to get a loan or credit card approval.

There is no favoritism when it comes to a consumer's credit report - as all data collected by the Credit bureaus are based on your consumer habits; for example, paying your bills on a timely manner, paying off debt quickly, and the balance amount of your debt. So their job is to compile information and report it. If at any time you look in your report and find that there are errors - you need to notify them. The credit bureaus will then investigate it and attempt to help you correct it. So it's a good idea to utilize the credit bureaus to your advantage by keeping up with your reports and scores to make sure all is accurate. This way, you can at least know that the information being reported won't work against you.

If you're curious to know what your FICO score is get a free credit report at Go Free Credit.

Disputing a bad item on your credit report can be very gratifying since you know it will eventually be removed. However, the question is: how long will it take? You probably have already been briefed that if you want a legitimate debt to be removed, it can take 7-10 years depending on what that debt is. And removing a bad debt is a little bit different ...

What is Considered a Bad Debt On a Credit Report?

A bad debt is an item that you find on your credit report that offers incorrect information. For instance, if you find that you have an item on your report that you never were associated with, this is a bad debt. Though you never actually charged this bad debt, your credit score is being negatively affected by it. So your job is to make sure that it's removed so that your score can return to an accurate state.

How Can You Remove It?

Once you've found your bad debt, your job is to contact the relevant credit bureau(s) to make sure that the item is removed. This requires that you send a written request with your full name and address, as well as the item you would like to have removed, and proof that the item shouldn't be there, to the bureau. Once they receive the request, they will conduct an investigation to determine the validity of your dispute.

When Will It Be Removed?

If the credit bureau determines that the item should be removed, it normally will take between 30 and 60 days to have it all resolved. However, it could take longer.

Typically, credit bureaus will not act on removing items on their own. Very often, you have to do the legwork to get it done yourself. So be prepared to check your report from time to time to make sure it's accurate.

Being aware of the status of your credit report is important, especially if you are planning to finance big ticket items, such as a car or a house. So it is important to monitor your credit report, because having even one bad item on your credit report can really hurt your credit score; and may hurt your chances of getting a good low interest rate on your loans. To keep this from happening to you, you should use a identity protection monitoring service. With identity protection monitoring services you can always monitoring how your credit report is doing and keep your credit report from having any errors that will hurt you.

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