It’s Never Too Late To Clean Up Your Credit Report
Beecher, IL (September 4, 2013) — Most people finance their homes with mortgages and pay for their cars with loans. Young people often obtain loans to pay for college. Businesses frequently depend on financing to expand. And, of course, lots of people make purchases with credit cards.
You can’t expect to receive credit as a matter of course, however. You must apply for it. And just as you would hesitate to lend money to a stranger, banks, retailers, or finance companies will not grant you credit without knowing something about you. To obtain this information, they rely on credit reports, which they receive from consumer reporting agencies, also called CRA’s. There are three major credit bureaus that operate nationwide - Experian, TransUnion, and Equifax - plus many smaller companies serving local markets. These companies collect information about your credit activities, store it in giant databases, and charge a fee for supplying the information to banks, retailers, insurers, even employers.
A credit report shows an individual’s or company’s borrowing and repayment history, including information about late payments and bankruptcy. This information is used to determine an individual’s credit worthiness; that is, determining an individual’s willingness to repay a debt. The willingness to repay a debt is indicated by how timely past payments have been made to other lenders. Your credit history information, good or bad, generally remains on your report for seven years. If you file for personal bankruptcy, that fact remains for 10 years.
To avoid any unwelcome surprises, it’s important to see a copy of your credit report before you apply for credit such as car loans, mortgages, or credit cards. By law, you are entitled to one free credit report annually. This free credit file can be requested through www.annualcreditreport.com or by contacting the companies directly by phone or by mail.
Errors in credit reports can be common. Keep in mind, however, that they are not part of a conspiracy against you. They are simply the result of human error. These errors may include an incorrect report of a nonpayment on a loan or debt; misfiling by a department store regarding a credit card account; confusion regarding family members with the same name: For instance, Jon Smith Jr.’s irresponsible bill paying could be recorded on Jon Smith Sr.’s credit report; or accounts opened without your approval by someone committing identity theft.
The faster you identify and rectify credit report errors, the better. Even small credit report errors can cost you big bucks - thousands of dollars - in elevated interest rates over the long run.
If you detect an error, immediately tell the credit bureau agency about any information you believe is erroneous. While traditionally done in writing, some credit bureaus offer online error reporting. Also, have proof of the error, such as a letter from the creditor admitting the mistake.
Keep in mind that results aren’t guaranteed - removing an error may or may not help your credit score. If you suspect the errors on your credit report are due to identity theft or fraud, notify the fraud divisions of all three consumer credit bureaus and ask them to put a fraud alert on your file. Also, require that creditors get permission before opening an account in your name. Other steps to take include filing a police report with your local police department and immediately closing any accounts that have been fraudulently opened in your name and follow up with those lenders in writing. Continue to monitor your credit report every few months to make sure no additional fraudulent activity has taken place.
There is no quick fix for repairing a damaged or poor credit report. But you can start by taking steps that will make it better, such as paying all of your bills on time, reducing the number of credit cards you currently have and lowering the limit on those you keep, avoiding tax liens, bankruptcies and collections, and living within your means (i.e. not maxing out your credit cards). With time and consistent behavior, your credit report should improve.
About First Community Bank and Trust
First Community Bank and Trust is a privately owned bank. Established in 1916 First Community Bank and Trust has been serving Beecher, IL, Peotone, IL and the surrounding communities for over 95 years. Our commitment to providing the best banking products and services is matched only by our outstanding customer service. We offer traditional community banking services, including mortgage, consumer, and commercial lending, as well as state of the art electronic banking services.
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Steven D. Koehn, VP
First Community Bank and Trust