Your Credit Report

[dollardaze]

There are many misunderstandings circulating about credit reports. I have heard many conflicting statements about them, and hope to clear up some of these misunderstandings. We need to have the correct information in order to properly monitor our credit reports.

1. Paying debts off does not make your credit report instantly clear of debts. A credit report is a history of your payments, and you cannot change the past.

2. Going to a credit counselor will not necessarily destroy your credit score. Your lender can handle downsized payments in either of two ways. They can in fact, legally report those difference in payment amounts as in arrears each month, or they can reward you for not declaring bankruptcy by reporting that your payments are up to date.

3. Don't cancel all of your credit cards, thinking that by doing so you are boosting your score. Experts agree that most creditors like to see 2 or 3 pieces of active credit, showing that your are responsible in handling debt.
Note that it's 2 or 3 cards, no more than that.

4. It used to be that too many inquiries could detrimentally affect your score, but this is no longer true. Credit agencies can recognize that you are shopping around (such as for a house or a car). This is perfectly fine to do.

5. Checking your own credit report does not hurt your standing. In fact it is wise to check to be sure there are no errors on your report.

6. There is not a specific time period in which credit scores are locked in place. As soon as the data on your credit report changes, so does your FICO score.

7. You need to check your credit report even if you do pay your bills on time. It is estimated that 80% of all credit reports have erroneous information on them.

8. Credit reports are not all the same. Most creditors in the U.S. do not report their information to all 3 credit reporting agencies. Since they are not the same company, they do not all have the same speed for updating information.

9. When getting a divorce, it is not automatic that all joint accounts will be severed, no matter what the judge has decided.

10. Bad debts do not always come off your credit report after 7 years. Chapter 13, does disappear 7 years from the filing date, but if you file Chapter 7 bankruptcy, the debt does not come off for 10 years from the filing date.

11. Erroneous information can be cleared up on your credit report, but those
companies claiming that they can fix your credit score for you, can only send a flood of dispute letters to the credit reporting agencies. If you have had late payments, they cannot actually erase those debts.