You are entitled to one free credit report every year and you must avail this opportunity to make sure your credit is correct. Not many people check their credit reports, and fewer still know what to look for in them. Make sure you go through it in detail to ensure there are no mistakes in it. Let us break down the sections for you so you can understand them easily:
You will be tempted to skip over this information, but do not. Make sure all the information is correct. Having the wrong information here can be bad for you later on. If some information is incorrect, it may make it hard to get approved for further loans; listing relationship status incorrectly, for instance, can link your credit score to someone you are no longer with.
This section holds everything about you that is a part of the public record, such as any lawsuits or bankruptcy announcements. Make sure your tax records are up-to-date as well; nothing that is paid should be marked as unpaid. Bankruptcies of your ex-spouse or spouse can also sometimes erroneously include you as well; make sure no such bankruptcy is mentioned in your report.
This is easily the most important section of your report. Credit histories are complex. Take your time and read carefully to ensure nothing is amiss. Here are some common ways there can be errors in your credit accounts:
You give back a car because it is hard for you to make payments. This may be marked as repossession, which it isn’t, and will have a negative effect on your score. Closed accounts and paid debts may show up as still being open. If you failed to pay a debt and it was passed on to a collection agency, it might show up twice, once owed to the original company and another time for the collections agency. Sometimes people with a similar name may have their own history show up in yours.
Any information that is more than seven years old should also not be included in the credit report. Another thing to keep in mind is to ensure that your spouse’s debts do not show up here, unless you are in a state where that is the law.
There should only be hard inquiries included in this section – no soft inquiries. If you see unauthorized inquiries (for example if you take a car for a test drive, the salesman might run a hard inquiry even though that isn’t allowed unless you explicitly mention wanting to get a loan for that car) you should immediately contact the institute that ran the inquiry and get it removed from your record.