Do you know the direction your credit report is heading? Do you even have a clue of the direction it should be heading? The majority of people have no clue as to what is on their credit report. Or even how to read it for that matter. What should you be doing to drive your credit in the right direction? These are important questions to answer.
Test yourself with this question: How many credit bureaus does your credit information get reported to?
Answer: Three! That’s right, Experian, TransUnion, and Equifax all get your information. This means there are 3 places your credit information is reported to. Many times in life, the majority of us have not learned how important our credit is. And we really should. You should have an overall sense of not only who your credit is reported to, but also what it says.
Your first step will be to retrieving a copy of your credit report. Did you know that you can receive a free copy of your credit report once a year by going to Annual Credit Report? For our clients, we like to also suggest another tool to keep up with their credit – Credit Karma. The annual credit report route is not always on target, though. When it comes to matching your credit score with what the credit bureaus have it sometimes misses the mark.
Credit Karma, is the best tool to use when it comes to keeping track of changes to your credit report. If a new credit line opens under your social security number, Credit Karma will notify you. If you pay off or close a credit line, it will notify you. With Credit Karma notifications, it makes you aware of any identity theft that may be trying to hit your credit report.
Reviewing Your Credit Report
Initially, you need to know what you are looking at when you review your credit report for the first time. This is one of the key strategies to understanding and repairing your credit.
It’s important to first look at your personal information. The personal profile section provides this information. By doing so you are making sure everything is correct.
You then do the same for all other areas on your report. There is nothing worst than working on building your credit only to find out that you are a victim of identity theft. The personal profile section helps you to be certain that your identity has not been compromised. There are other sections on your credit report and every section is important. For instance, there is information that is on your report that is public record and you want to look at that and make sure it’s correct.
Let’s start with account history, this will give you a full overview of every account open in your name and under your social security number. Even if you are a co-signer on an account with someone else it will show on your report.
Most people know that excessive hard inquiries to check credit can negatively impact credit scores, but you might not even realize who runs a hard inquiry. Applying for a credit card, loan or mortgage will typically result in a hard inquiry. Each hard inquiry is like a hit to your credit, hence hard inquiry.
The best way to avoid dragging your score down will be to limit the number of hits on your credit report.
It is often quipped that the only certainty in life is death and taxes. The IRS takes a hard line with back taxes and could even put a lien on your home or garnish your wages to get what they are due.
The good news is that owing the IRS money shouldn’t affect your credit score. In 2017, Equifax, Experian and TransUnion, the National Credit Reporting Agencies (NCRAs), announced and implemented enhanced standards for the collection and timely updating of public record data included in consumer credit reports. This was part of the National Consumer Assistance Plan (NCAP).
Upon implementing the NCAP enhanced standards for public records, the NCRAs removed all civil judgments and the majority of tax liens from their consumer credit reporting databases.
In 2018, the NCRAs, including TransUnion, decided to cease reporting tax lien data and to remove all remaining tax liens from our consumer credit reporting database. They did this in order to ensure compliance with the enhanced standards of the NCAP.
In sum, obtaining your credit report, reviewing your credit and understanding your credit report are key steps to your financial journey. Just by starting out with the above steps you will be on the right road to improving your credit and avoiding financial pitfalls.