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It is very important to review your personal credit report and fix any entries that are incorrect. All your purchases and payments are tracked by your bank or financial institution and reported to one of the three major credit bureaus. This helps lending institutions decide the risk factor involved when lending you their money. The credit bureau also track your job history and whether you own your home. All these factors play a role in approving or denying credit.

Why is it important to understand and rectify mistakes in a credit report?
If you have a squeaky clean credit, you will be offered lower interest on home mortgage loan, store cards or credit cards. Experts advise on requesting your credit report at least 3-6 months before any major purchase to give you enough time to review and notify the credit bureau of any mistakes. You are entitled to a free copy of your credit report, once a year. You can call up each of the three credit bureau and ask for a free credit report. Some people like to spread them over a year so they can focus on fixing each credit report at a time.

If you had applied for a credit card, a store card or a mortgage loan or for that matter any other line of credit because of something the lender or the bank saw in your credit report, you can obtain a copy of your credit report for free. Lenders are required to inform you about your eligibility for a free credit report when credit has been denied.

Once the credit report arrives in the mail, review all accounts to make sure they belong to you. If you believe a certain loan is listed that was paid off or a credit card was cancelled as is listed as open, contact the credit bureau and follow their procedure to correct or remove the incorrect entries from your credit report.

In many cases, the credit report will include a correction form for reporting inaccuracies found in the report. For every entry you intend to correct or remove, provide as much details as possible, and if you have any support documents to back up your claim, feel free to stick them in. The credit bureau has 30 days to investigate further on your case. Written communication is essential since if the credit bureau decides the credit report is accurate as it stands, you should try to correct the report by providing your side of the story. The credit bureau, by law, will provide this written letter to any lender who requests your credit report.

The following factors are considered by lenders before they decide to approve or reject credit

• You bill payment history - Have you been paying your bills on time.


• Have any of your bills been referred to a collection agency?


• Have you declared bankruptcy?


• How much debt is outstanding on your accounts?


• How long is your credit history? The longer the better


• Have you applied for credit lately? The less credit you have applied for, the better.

Most of the information in your credit report is retained by the credit bureau for 7 to 10 years. You can repair your credit by paying bills on time, lowering your existing balances and not seeking new credit accounts. If you have been doing it right for at least a year, lenders will take notice and you will get better interest rates on mortgage loans and other loans.

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