A high credit score is important to me, so I check my credit report once every three months to make certain it’s free of errors. Recently, I noticed some inaccurate information; my mortgage loan had been sold to a new company, but on my credit report, there appeared to be two mortgage loans – one with the new company and the same one with the old company.
To correct the error, I filed a dispute on the Equifax website, which only took about three minutes. About two weeks later, I received a letter from Equifax stating that the old loan was now closed. The process to correct the error was quick and easy.
But for many people, credit reports can be filled with pages of information that can be hard to decipher. If you haven’t checked your credit report recently, you can get a free copy at www.annualcreditreport.com.
Once you begin sifting through the report, here are the answers to some key questions you may have:
1. What Should I Look For When Reviewing The ‘Account History’ Section?
First, verify that you own all of the accounts listed. Next, check balances and dates, especially with accounts that have negative information. Any inaccuracies should be disputed, and if there are any accounts listed that you don’t recognize, you should begin to investigate these accounts (especially for third-party debt collectors). Though the original creditor of an account should still be listed, companies frequently sell delinquent debts to third-party debt collection companies, so the record appearing in the credit report will be under a different name. Mistakes can happen during the transfer, so it is important to verify dates and balances for accuracy.
2. What Should I Do If I See An Error?
Each reporting bureau includes information in the credit report about how to register a dispute. Generating a paper trail is important, so consumers should dispute information in writing and send copies of any supporting documentation via certified mail.
3. If There’s A Public Record On My Credit Report, How Long Until It’s Expunged?
Most public records (including judgments, foreclosures, and Chapter 13 bankruptcies) will stay on a credit report for 7 years. A Chapter 7 bankruptcy will remain for 10 years.
4. How Does Missing A Bill Payment Affect My Credit Score?
Missing a single payment at the 30-day or even 60-day mark will affect your credit report and have a negative impact on your credit score. The greater divide comes at the 90-day mark, when consumers are then deemed more likely to miss payments repeatedly. It is important to keep in mind that payment history accounts for 35% of the credit score, so paying on time carries a lot of weight.
RELATED: How Your Credit Score Is Calculated
5. If Problems Occurred A Long Time Ago, And I’ve Improved My Bill Paying Habits Since Then, Will That Help?
As negative information gets older, the impact on your credit score lessens. In many cases, the most recent 2 years will have the greatest impact on the score. However, more recent history needs to reflect positive information. Any new negative information will increase the damage to your credit score because it will indicate a pattern of late payments.
6. What’s The Best Strategy For Managing Credit Scores?
Credit scores are fluid, so our scores today can be different from next month. Because credit reports are free and credit scores cost money, it is more beneficial for consumers to manage and monitor their credit reports, verifying information and disputing inaccuracies. Credit scores become relevant when consumers actively seek credit – such as a mortgage, car loan, or credit card. Especially when shopping for a home loan, you should start reviewing your credit scores well in advance of applying for credit.
RELATED: 10 Commandments Of Money Management