Consumer Reports: Credit Report Confusion

Your credit score is used by lenders and others to predict whether you're a good credit risk. The three big reporting bureaus-- Experian, Equifax, and Transunion--calculate your credit score based on the data they have about you from banks, credit cards, and from public records such as bankruptcy filings and tax liens. A bad credit score can impact everything from your mortgage to whether you can rent an apartment or even get a job, so it's important to know your credit score and look over your credit report for errors. It is estimated that one in four reports have serious mistakes.

Consumer Reports says that the easiest way to get your credit reports with the corresponding credit scores is to go to myfico.com. For about $45, you'll get your reports from the three leading credit bureaus. But once you've gotten your report, you might be shocked by how long and complicated it is. Consumer Reports has the following tips on deciphering your credit report.

First, check your personal information, including your name, social security number, and date of birth. Next, make sure the addresses listed are accurate. Too many addresses can indicate a lack of stability, so you'll want to have any incorrect addresses removed. Also be sure that you recognize all the credit sources on your report. You will want to dispute the credit accounts you don't recognize.

Once you've made sure that your report is accurate, Consumer Reports says there are steps you can take to improve your credit standing. Sign up for automatic bill payment to reduce the chance of making a late payment. Also, time your spending and don't run up a lot of bills right before you apply for a car loan or mortgage. And limit the number of credit cards you apply for--each time a lender checks your credit history, it lowers your rating.

Free information on how to read your credit report is available on the home page of ConsumerReports.org.

Consumer Reports is a non-profit company and has no commercial relationship with any advertiser or sponsor appearing on this Web site.

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