Credit
History
Your Credit History and How It Affects
Your Future
Practical money skills are an important part of managing
life. By handling your personal finances wisely, you can
enjoy peace of mind, financial security, buying power,
and freedom that will enhance the rest of your life-Practical
Money Skills for Life.
Your Credit History A Public Record of How Well you
Handle Credit
To get a glimpse of your financial future,
many businesses look at your financial
past-all documented in your credit report.
A good credit report can not only help
you obtain new financial products, but
also secure a new home loan, or even
get car insurance. This pamphlet explains
why your credit history matters, how
to correct credit report errors, what
credit bureaus are, and how to keep your
credit rating strong.
Establish a Credit History You'll
Be Proud to Have
What Is a Credit History?
Your credit history is a financial profile.
It lets lenders know how you have managed
money matters in the past and helps them
decide whether or not to do business
with you. This history is contained in
a credit report that is kept on file
by credit bureaus, and may include such
information as:
- How promptly you have paid off credit
cards and loans
- How well you have handled other bills,
such as rent and utilities
- Your checking and savings account
histories, including bounced checks
- Your total outstanding debts
- How much credit you still have available
on your cards
Who Can See Your Credit Report?
Your credit report can be-and most likely
will be -reviewed by anyone planning
to give you a loan or credit, such as
loan Issuers, card Issuers, auto financing
companies, and insurance companies. Your
report also may be checked by landlords
and potential employers. In most cases,
they are simply verifying the accuracy
of the information you have given them.
Some lenders may also use the details
in your report to determine how much
credit they are willing to offer you.
Credit bureaus are not required to notify
you when someone asks to see your report-since
access is only allowed with your authorization.
So, be aware of what you're signing.
Checking Your Own Credit Report
It's a good idea to check your credit
report at least once a year to see what
it says about you. Just contact any of
the credit bureaus listed on the back
of this pamphlet. You may be charged
a small fee. However, if you have been
denied credit in the past 60 days, you
have the legal right to receive a free
copy of your report from the bureau that
issued it.
How to Correct Credit Report Errors
If your credit report contains any mistakes,
credit bureaus are bound by law to correct
them at no charge, providing that you
inform the bureau of the problem in writing
within 30 days of receiving your report.
Remember the report is supposed to contain
accurate information-good and bad.
If the investigation of your claim does
not lead to a satisfactory result, you
can send the bureau a written statement
of up to 100 words explaining the situation
again. Be sure to include photocopies
or other proof to support your claim.
In many cases, the bureau will have to
include your statement with any future
reports that contain the disputed information.
Beware of "Quick Fixes" for Accurate
Credit Problems
If you've had any late payments, foreclosures,
or repossessions, this information stays
in your credit report for up to seven
years. If you've filed for bankruptcy,
this information can stay in your report
for up to 10 years.
Some companies claim they can "fix" such
problems for a fee. However, it is
legally impossible to alter an accurate
credit history. If you find yourself
in financial trouble, work instead with
a budget and your creditors to reestablish
a good credit rating.
A Few Facts About Credit Bureaus
Credit bureaus are independent agencies
that collect personal credit information
and distribute it to lenders. Although
there are local agencies in many states,
most credit reports are managed by the
three national bureaus listed on the
back of this pamphlet. All credit bureaus
should have the same information about
your credit history.
Tips to Keep Your Credit Rating
Strong
- Complete credit applications carefully
and always use the same name.
- Use your credit cards responsibly
to establish a positive pattern of
paying your bills on time, but don't
let them reach their limit or spend
beyond your means.
- Always pay bills on time and make
at least the minimum payment.
- If you move, let your creditors
know your new address as soon as possible
to avoid losing bills or receiving
them late.
- If you have problems paying your
bills, contact your creditors. In many
cases, they will work with you to figure
out a payment plan.
To Obtain a Copy of Your Credit
Report
There is typically a fee for requesting
reports. Contact the following bureaus
for more details.
To Learn More About Laws that Regulate
Credit Bureaus
Contact your regional Federal Trade Commission (FTC) office or the national
FTC office at:
Federal Trade Commission
600 Pennsylvania Avenue, NW
Washington, D.C. 20580
1-202-326-2222
www.ftc.gov
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