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Understanding your credit report [how to] | Lavoz

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When it comes to fully understanding your financial situation, there’s an easy place to start: your credit report.

Your credit report sums up everything about you and your relationship with debt. It provides a picture to potential creditors about who you are as a person when it comes to financial activities.

“If you’re applying for housing, a landlord can check your credit,” says Kelley Lutz, president of the Credit Bureau of Lancaster County. “A retail store can check your credit. When you’re applying for a car loan or a mortgage, they will check your credit. Even a potential employer can check your credit.”

Because of the significance of a credit report, it’s also important to understand how to read the report and what to look for, Lutz says.

“The best way to get your credit report is to go to, which is a free service,” she says.

This report compiles information from the three main credit reporting agencies: TransUnion, Experian and Equifax.

“Every consumer is entitled to one free credit report annually through that website,” she says.

Once you have your report, take some time to read through it for accuracy.

“You want to make sure everything is accurate, from all your previous addresses to your middle initial, your date of birth, your Social Security number and so on,” she says. “Look at your lines of credit like your mortgage or bank loans. Really scrutinize that report.”

If you find inaccuracies, the website provides explicit instructions for how to dispute the information, Lutz says.

Your credit score is also important, she says, but she emphasizes not focusing on a specific target number.

“What’s considered a good credit score really depends on the lender,” she explains. “There’s a range of credit scores from X to Y. When you go to the credit grantor, you may get a better rate if your score is higher, but just because you have a lower score, it doesn’t mean you won’t get credit.”

According to Experian, credit scores range from about 300 and 850, with a score of 700 or above generally considered “good.”

However, Lutz points out it’s important not to get too focused on a specific number.

Credit scores change all the time, she says, so it’s hard to put an emphasis on a certain number.

“You could have a certain number today but then 60 days from now, apply for a loan and that will impact your score,” she says.

You can take steps to establish good credit.

“Paying your bills on time is the most important thing,” Lutz explains. “Any late payment is going to have a negative effect on your score.”

And make sure you’re sticking to a budget.

“Budgeting isn’t something that’s really taught, but it’s very important,” she says.

If you run behind on payments, it’s also important to take steps to fix problems before they have a long-term effect on your credit.

“If you find you’re getting overextended, contact your creditors and try to work on lowering your rate,” Lutz says. “Negotiate different payment arrangements. Just ignoring the situation is not going to help. It’s really important that you communicate with your creditor.”

Lutz also cautions against taking extreme measures to fix credit problems.

“Be really wary of going online and looking for help. Be cautious as to where you go for help,” she says. “A lot of times, people are so desperate, they’ll pay someone to repair their credit and that’s not a good idea.”

Legitimate help for repairing credit is available through resources including Tabor, which provides free consumer credit counseling.

“There is help out there if you need it,” Lutz says. “Just be careful where you go for help.”

Source: on 2019-05-31 09:07:30

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