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It is Wise for Consumers to Check Their Credit Report |
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As a general rule, it's wise tocheck your credit report before you apply for credit for a major purchase. Negative comments could make a big difference in the interest rate you pay for mortgages, car loans and even your credit card balances. And errors are fairly common. Recent studies show that 70% of all credit reports contain at least one error. It should be enough to check your credit report by at least one of the credit-reporting agency (Equifax, Experian and Trans Union), unless you've had some problems. Identify Negative Information The best way to determine if you have negative information in your credit report is to order a copy and check credit report carefully. For a thorough review, you should check with all three CRAs since there may be some variations in the file each CRA maintains on you. This should be done at least once a year. Because the crime of identity theft is on the rise, we recommend that you check at least one of your credit reports every six months. You should also check your credit report when you know it is going to be used to make important decisions, such as applying for an automobile or home loan, or applying for a job. Reports should be ordered at least one to two months before you apply for credit or intend to rent. At these crucial times, you do not want to be surprised to find that your report contains negative information, especially if that information is inaccurate. A creditor has the duty to report only accurate, complete, and updated information to a CRA. For example, if you close an account voluntarily, your creditor must report this fact to distinguish it from an account that is closed for nonpayment. If you disagree with a creditor's report of negative information, the creditor must put a notice of that dispute in your file before reporting to the CRA. You need to check credit report to see that your creditor is giving correct entries to CRA. Some of your creditors may provide documentation that you have authorized for a credit inquiry. Read the authorization that you signed very carefully. If the authorization was too complicated for a layman to fully comprehend, you can write back to the creditor. You may also threaten to contact the State Banking Commission and complain about a deceptive and unclear authorization form if they don't remove your inquiry. So check your credit report today, as it is only thing that keep you aware about your rights. You need to check credit report because they list the inquiries that have been made for a consumers report. There are indications that if a consumer makes several applications in the course of shopping around for credit, the additional inquiries listed on his or her credit report will be considered a negative factor by financial institutions judging creditworthiness. An Equifax representative said each time a consumer makes an application with a bank, a credit inquiry is made to Equifax. If the consumer applies to 10 banks, then his record will reflect that there have been 10 applications. That could send up a red flag with the next borrower he approaches. Why is this consumer making so many applications for credit? Is there something wrong? It's wise for a consumer to check credit report for how many inquiries he has made, as it may affect him negatively. The use of the number of credit inquiries in credit scoring models could also disadvantage consumers in the market place. Since inquiries are a factor in computing a credit score, it would follow that a consumer's score is reduced the more he or she shops around for credit. If a score is reduced, "it probably won't drop much... Looking for new credit can equate with higher risk, but most credit scores are not affected by multiple inquiries from auto or mortgage lenders within a short period of time. So it's better to check credit report consistently as it will help you to provide information about how many inquiries you have made. |
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