Learn About Credit - Understanding Your Credit Report

Before you can learn about credit, you have to be able to understand your credit report. You should get a copy of your credit report each year from the three main reporting agencies. This includes TransUnion, Experian and Equifax. The credit companies that issue you credit use one or all of them to determine your credit worthiness. You should understand your credit report and make sure that there is nothing on there that is detrimental to your credit history.

The first thing you should know when you learn about credit is that you are entitled to one free credit report each year from each of the three agencies. You should be able to read the credit report. This will list all of your creditors, whose name the credit card or account is under (if joint) and how much is owed on the balance. The credit report might not be entirely accurate. There may be erroneous reports on the credit report that have to be removed. If this is the case, you can then have the right to dispute any information that is not accurate.

You have probably heard about identity theft and other types of identity crimes. What you may not realize is that someone could have opened up an account under your name and be using it without your knowledge. They may be building up credit so that they can get a cash advance for a lot of money, leaving you holding the bag. This is why it is so important to take a look at your credit reports from each of the three reporting agencies, each year.

You will see all active credit cards and loans on your credit report. If you have had bank loans and car loans that have been paid off, they will be on your credit report. If you have paid off any credit cards or cancelled them, they will be on your credit report. If you have not paid off a debt, it will be considered a charge off and that will be reflected on your credit report.

A potential lender will look at your credit report and use it to determine whether or not they should loan you money. If there are items on your credit report that are wrong, you need to dispute them with the credit bureau. The credit bureau then has to prove that the item belongs to you, not vice versa. If they cannot prove that it is your item, they have to remove it from the credit report.

Your credit report will continue to change. Items such as charge backs are only kept on a credit report for a period of 7 years. Bankruptcies are kept on a credit report for a period of 10 years. After that, your credit report is clean again. Even if you have filed a bankruptcy, you can start rebuilding your credit by getting a credit card and paying it off in a timely manner. Your credit score will begin to rise even with the bankruptcy on your record and after 10 years, you can start anew with your credit. Understanding your credit report is the most important step when you learn about credit.