When was the last time you checked your credit report? If you have challenging credit, and if you have not already done so, you may want to order your credit report from Equifax, Experian and Trans Union. In addition, you may want to sign up for a credit-monitoring program. It is important for consumers to understand that they are entitled to a free credit report every year. Sources such as AnnualCreditReport.com will allow you to obtain a free annual credit report from all three credit bureaus. You can use other sites but make sure that you read the fine print because some sites charge a fee for these services even though they advertise that their services are free.
Once you receive your credit reports, it is important to comb through all three. It is most likely they contain different information. Make sure all your accounts match up. If there is anything in your reports that should not be, file a dispute. Also, make sure that your names, prior names, addresses, prior addresses and employment and prior employment are correct. With cases of identity fraud rising each year, you want to make sure you are not a victim by taking the proper steps to protect your credit.
It is also very important to obtain your credit score from all three bureaus. Most is your credit score (also known as FICO) can mean the difference between credit acceptance and credit rejection. Your FICO score is a combination of, your payment history, amounts owed, length of credit history, new credit and types of credits used. Your payment history and amounts owed are the biggest derivatives of your FICO score. In some cases when applying for business credit, banks will take into consideration your personal credit and FICO score.
The federal reporting period for most debts is seven (7) years. Bankruptcies and judgments stay on your credit for ten (10) years. It is important that you do not confuse the federal reporting period with the statute of limitations. The statute of limitations is simply the period in which a creditor can pursue you legally for an outstanding or negative debt; be it wage garnishment, tax seizure or property lien. The amount of time varies from state to state. For example, in the state of Ohio, the statute of limitations is fifteen (15) years and the statute of limitations in the state of Texas is four (4) years. So even though the federal reporting period is seven (7) years, and a debt falls off your credit report after such time, a resident of the state of Ohio can still be pursued or sued for the lack of a better word, eight (8) years after the federal reporting period has expired.
It is important to clear up, dispute, or pay off any negative debt on your credit report. Once you dispute a negative entry on your CBR (credit bureau report), the rule of thumb is that a creditor has thirty days to dispute the validity of that debt. If they do not respond to your dispute within that period, the credit bureau is supposed to remove the entry from your report. However, keep in mind that there is always a gray area and that credit reporting companies, creditor companies, and debtors are all human.
If you do not have any credit, start building your credit score. You can do this by opening a low limit credit, low interest rate credit account. To some creditors, no credit is just as much a credit risk as a consumer with bad credit, so it is important to obtain and maintain a positive credit and payment history. In just a few months you will have established your credit.