All About That Credit is a 4-part series about establishing, improving and maintaining good credit. Credit is a complex topic, and while I hope this series will be informative, I welcome questions specific to your particular situation.
Part 3: Your Credit Report
Scenario: You decide you are going to purchase a car. You have had your eye on a particular model, and saved for the down payment. The local dealership advertised a sale price, and a monthly payment amount that fits your budget. You head to the dealership with your friend in tow as moral support and to ensure you won’t be taken advantage of during the final negotiations. You find THE car you are looking for, and fortunately, feel good about the negotiated price. Next, it’s time to review financing options. After assessing your income and credit report, the finance manager presents the terms of the loan, and sure enough, that’s when sticker shock strikes. The monthly payment is more than you can afford.How can this be?
One culprit could be the information in your credit report. Before going to the dealership did you check your credit score and review your report to confirm the information was accurate? Credit reports will affect your loan interest rate and ultimately your monthly payment, so you want to be sure your credit information is reported accurately.
You are entitled to a free copy of your credit report once a year from each of the three reporting agencies. Visit https://www.annualcreditreport.com/ to get yours and be sure to review each section of the report, checking each account listed for any errors or incomplete information.
Here is a checklist of things to look for:
- Errors in your personal information
- Accounts that are not yours
- Accounts that are missing
- Incorrect account history such as a late payment when you have paid on time
- Debts that were discharged but are still showing a balance
- Incorrect information on a disputed credit card charge
- Closed accounts that are listed as open
- Accounts sent to collection, but don’t show up as turned over, which then appear to be overdue
- Any incorrect information more than seven years old (i.e. child support payments, account delinquency, or tax liens)
Errors or incorrect information should be addressed with the reporting agency.
Not only will your credit report affect your car financing rates, but it may impact credit card approvals, apartment rental requests, and even a job application in some states. Furthermore, 86% of identity theft victims (approximately 7% of U.S. adults in 2014) experienced fraudulent use of existing account information, such as credit card or bank account information. (Source: Bureau of Justice Statistics). Your credit report is a good resource for helping to protect your identity. This just reiterates the importance of knowing what is being reported on your credit report.
Next up: Part 4 – Improve Your Credit Score