Your credit reports and credit scores are used by potential lenders to decide whether they’re willing to loan you money at an attractive interest rate. Each credit report lists information on your current and paid-off loans, along with payment history, total current debt, and negative items such as bankruptcy, foreclosure, or accounts in collection.
Many people don’t realize that errors on credit reports are common and any incorrect information on your credit report could be impacting your credit score in a negative way. One of the most important things you should do to protect or improve your credit is to check all three of your credit bureau reports to make sure the information on them is accurate.
3 Bureaus, 3 Different Credit Scores
Whenever you apply for credit, potential lenders may pull your credit report from just one credit bureau or from all three of the major credit bureaus (Experian, TransUnion, and Equifax). The information on each credit report reflects how you have handled borrowed money up until now.
What many people don’t know is that creditors aren’t required to report to all three credit bureaus. This means the information included in each credit report may be slightly different. When you apply for new credit, a hard inquiry shows on your credit report, but may not show on all three, which is another reason credit scores can vary between credit bureaus.
Why Should You Review Your Credit Reports?
The information on your credit reports is a factor in determining whether you’re approved for new credit. Creditors that approve your application also determine the rate and terms of your account based on this information. Incorrect information on your credit report can cost you money if your interest rate is higher than it should be, or it can put roadblocks in your path in other ways.
Applying for new credit isn’t the only reason that you should make sure you know what’s on your credit report and that all the information is correct. When you apply for a new job, you may find that some potential employers pull a credit report as part of their decision whether or not to hire you. Your credit report may also be used by insurance companies, cell phone companies, and potential landlords.
Types of Errors to Look For
Review credit reports ensuring your name is spelled correctly and that your address, phone number, and social security number are all accurate. Review the list of open accounts to make sure no accounts are listed as open accounts that are already paid off. Check that the balances look correct and that there are not any payments that are being reported as late that were paid on time. Also, make sure that there are not any accounts listed that you don’t recognize since these may be a sign of identity theft.
Accessing Your Credit Reports and Credit Scores
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