Finally, The Truth About Credit Repair and Free Credit Reports

Do you have a bad credit score? You're not alone. In fact, according to the Federal Trade Commission, roughly one-third of US adults have a bad credit score. So what do you do if your credit report has mistakes on it? Here are the top ten most frequently asked questions about credit reports and how to fix them.

A lot of people are being advised these days about the importance of having good personal credit. Based on the reports they read in the media, they think that this will lead to a better job and a better lifestyle. But are personal credit scores really as important as they seem?

Well, it depends on what type of credit you need and, to a certain extent, on how you use it. If you're managing an account or two responsibly, the fact that your score is low may not make much of a difference in your ability to keep these accounts open.

But if you consistently apply for credit cards or loans when you shouldn't be getting them, then you could find yourself denied for no other reason than having poor credit history.

Unfortunately, many people think that they can easily fix a bad credit history. They will look through the reports and make sure that they get the problems fixed. They will ask questions and make sure that their "bad" credit score isn't one of the mistakes on their report.

But unfortunately, there are two main questions about your credit score that you should be asking yourself before you try to fix it. First of all, how do you know if your score is really low or not? The answer lies in the credit report that you've received from the three credit reporting agencies.

Your score is calculated by looking at the completeness and accuracy of the information on your report. These specific factors are:

1. Amounts Owed – Does everything you owe appear in your data? If there are more than five entries for any debts listed on your credit report, that section is considered incomplete and results in a lower score. For example, if you have 10 outstanding accounts and six of them show debt balances on their reports, then there are six missing debts which can lower your credit score by up to 30 points or more.

2. Types of Accounts – You need to see that there is a history of your accounts on the reports you're getting from the three credit reporting agencies. If you are able to see that your credit cards are listed, but not just listed and not paid off, then you will have trouble setting up new accounts when you need them.

3. Debt Amounts – Credit history isn't just about the balances of your existing accounts. You also have to make sure that your account balances are accurate and up-to-date as well as that they include each entry in its entirety. Late payments and inaccurate statements can lower your score significantly if they go unnoticed by the agencies reporting them to the credit bureaus.

4. Credit Inquiries – Your inquiries include any activity that you're taking to get new credit. That includes applying for a new account, having a credit bureau check your report, or applying for a loan.

5. Account History – Taking care of your existing accounts can affect your credit history. For example, if you have an account with a small balance and low balances on each of the cards that make up the account, then it will have a positive influence on any future credit applications that you fill out. The best way to know what information is appearing on your reports is to check them regularly at AnnualCreditReport.com .

6. Late Payments – Late payments should be more than 5% of your total accounts each year. If you make late payments more than 5% of the time, then you are in danger of having late charges built into your credit score which will reflect negatively on the rest of your history.

7. Credit Inquiries – Take note of how many inquiries you're making each month and check to see that there aren't any limits or controls in place that limit the number or type of inquiries or inquiries to particular types of loans, accounts, or creditors.

8. Errors or Omissions – These are the most common mistakes on credit reports. Even small issues that don't affect your score can reflect negatively if they go unnoticed by the agencies that report your information to the credit bureaus.

9. The Existence of Negative Information – It's always best to be honest when it comes to applications for new accounts and new loans. The worst thing you can do is lie about something in a credit application or loan application so that it reflects negatively on your current scores.

10. Accuracy of Information – Last, but not least, you want to make sure that your credit report is a complete and accurate representation of all of the information presented on it by Experian, Equifax, and TransUnion .

Nobody really knows what a good credit score is until they get their report. That's why it's important to check your reports before you apply for any new credit cards or loans. You need to know exactly what to look for and spot the mistakes that may be on your report.

Remember, these mistakes can be corrected by having them removed from your report as long as you know about them and know that they're there in the first place.

You won't be able to fix any errors on your own, so contacting one of the three credit reporting agencies is a good idea if you have an issue with something on your personal credit report . After all, you wouldn't try to fix a stopped up toilet on your own, so why would you try to fix problems with your credit report?

Making sure that your credit score is up-to-date and accurate is something that should be done every year or every six months. You can save yourself a lot of money by not applying for new accounts when you don't need them. That's why it's so important for people to check their reports prior to applying for new credit card accounts, loans, or any other form of debt.

People should also be responsible when they do apply for credit cards and loans. It's easy to get into debt and not be able to make your payments, or it's just as easy to forget about your bills and be late paying them. That will reflect negatively on your credit score.

You can help avoid late payments by setting up direct debits with your creditors so that you can set up automatic payments that will ensure you pay off your bills on time each month. The same can be said for overdue accounts as well.

And last, but not least, if you're planning on getting married and filing a joint return with your spouse, it's best to check both of your credit reports together before doing so.

Conclusion

A good credit score is very important in today's world. Having a high score will allow you to get the credit cards, loans, and mortgages that you need to purchase big ticket items when you need them most. Having a low credit score will keep you from getting the best rates for your loans and borrowing power for your new car or mortgage.

It's important to know what is on your report before you apply for any new accounts so that you can make sure that everything is in order when the time comes for another round of applications. It's also important to recognize how your actions are going to affect your scores and how they can be affected by others as well.