Credit Card Advice: Four Credit Reporting Questions Answered

Written by , July 26, 2012

Credit Card Advice Four Credit Reporting Questions AnsweredYour credit report is one of the single most important financial documents in your life. Depending on what’s contained in the report, you may end up having to pay tens or even hundreds of thousands of dollars in higher interest rates when you borrow money for home and car loans, as well as credit card charges, over the course of your life. In fact, if your credit report has some problems listed, you may not even be able to get a loan at all.

Despite the importance of your credit report, there are still a number of areas that people are often confused by.

Here is some credit card advice and the answers to four significant but common credit reporting questions.

  • What is a Credit Report? Your credit report is a document that lists all of your credit and credit-related activities. It lists all of your accounts – which will include credit cards, student loans, personal loans, home mortgages and any other extensions of credit – and will also list other information that may have been reported by landlords, cell phone companies and utilities if you were ever late in paying your bills. There are several large credit reporting agencies in the United States, and each of them will maintain their own report on your activities.
  • What if My Credit Report Has Mistakes? You can obtain a copy of your credit report from the credit agencies at any time, and you can do so at no charge once every year. You should review your credit report at least annually to make sure that it is accurate. If your credit report contains mistakes that are of a negative nature (such as a late payment record for something you actually paid on time), then it’s incumbent upon you to correct those errors as soon as possible. Having negative information that’s inaccurate will make it more difficult and more expensive for you to borrow.
  • How Can I Repair My Credit? Your credit reports will form a major component of your credit score. Your credit score is a number that many lenders use to quickly evaluate your credit worthiness, and the appropriate terms on which to extend you any credit. In order to repair your credit or improve your score, first make sure that you’re paying all of your bills on time. If you ever find yourself in a situation where you think you’ll be unable to do so, proactively contact your lender or credit card company and see if you can work out a temporary grace period or a lower payment obligation for a month or two – many lenders will be willing to do so.
  • How Long Does Negative Information Stay on My Credit Report? The length of time certain types of information will remain on the report depends on what the information relates to. Any missing payments on revolving credit accounts can remain on your record for seven years. This is also the case for accounts that have been forwarded to a collection agency, as well as any public judgments against you. A Chapter 7 or Chapter 11 bankruptcy will remain on your credit report for 10 years. Any unpaid tax liens, however, will remain on your credit report until they are satisfied or released (except that these items will only remain for 10 years if you are a resident of California).
  • Given the importance that your credit report will play in your financial future, it’s important to learn as much as you can about how the credit reporting process works, and how you can manage your file.

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