There's no better time to start getting intimately acquainted with your credit report than right now. After all, your credit report isn't going away - it will follow you around like a shadow until the day you die. So you'd better understand what's in it. Then, and only then, can you truly start improving your credit.
Your credit information is what prospective lenders use to make decisions about your credit worthiness. When that information is good, you'll get the best loan rates and terms. But when it's bad, you'll get more expensive rates and terms. And if it's really bad, you'll be refused outright. So knowing both your credit score and what is in your credit report gives you an idea of what you can and cannot qualify for.
The information contained in your credit report is a compilation of records supplied to the credit bureaus by all of the companies you've done credit business with. For instance, if you've had a car loan, that bank or lender who serviced your loan has supplied monthly updates to the credit bureaus about your payments. The same is true for every credit card, department store charge account, and mortgage you've ever had as well.
The credit bureaus in turn store and compile this information and then make it available to their subscribing clients - i.e. banks, lenders, collection agencies, landlords, and employers. It's a pretty profitable business for the bureaus and a very useful service for the clients because it helps them make the right lending and other business decisions. The system runs pretty smoothly but that doesn't mean there aren't any issues.
The major credit reporting issue individuals deal with most is the inclusion of inaccuracies in their credit reports. You see the credit bureaus themselves don't validate the information they receive from creditors, they merely validate that the information they're receiving is coming from the correct source. So if that source information has mistakes in it, those mistakes just end up finding their way into your report. And that my friends is the single most important reason why you should examine your credit report information on a regular basis.
Incorrect information more often than not tends to be derogatory information. That means it's information that will hurt your credit rating and score. That in turn costs you money when you attempt to exercise your credit. So when you know (sooner than later) that a mistake has occurred, you can correct it before it can truly hurt you financially.
So do yourself a big favor and pull your credit report and then study it. You can get your report easily from several different subscription credit reporting services for a small amount of money each month. You can also pull your credit report from free from each of the three credit bureaus once a year - that means three free reports a year. However you do it, do it quickly so you can get out ahead of any mistakes or inaccuracies you might find. Then, when you've whipped your credit report into shape, you can go out and shop for that car loan, or that credit card, or that mortgage refinance with confidence. And you'll save some money too.
Rick Cain writes about improving your credit and all other kinds of credit issues. To read more from Rick, follow his blog at CreditRants.wordpress.com.
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