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Guard your credit report

June 07, 2002|by LYNN F. LITTLE

Your credit history is a written record that summarizes what type of credit you have used and your history of making payments on time. You should want to know what your lenders are saying about you.

Your credit report contains a great deal of information about you and you have a right to see (and should want to examine) a credit report that describes the information in your credit file. Reviewing your credit file/report is very important.

You have a right to see your credit report from each of the three credit reporting agencies: Trans Union, Equifax and Experian.

If you are a Maryland resident, once a year, you can request a copy of your report at no cost.

Reviewing your credit file will allow you to make sure your information is accurate.

When you review your credit report, focus on the following questions:

-- Is someone else's information on your report?

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-- Has a creditor reported incorrect information?

-- Do you need to tell your side of the story?

-- Are there open accounts you no longer use?

If you do find mistakes, contact the credit bureau immediately. After investigating your request, the credit bureau will notify you if the negative data will be removed or stay on your record.

Your credit history is the business of companies who sell insurance, lend money for home mortgages, rent homes and employ you. These companies subscribe to the services of credit reporting agencies that collect information about you and provide it to them for business purposes.

Until recently, one of the most important pieces of information that companies could get about you - your credit score - was not available to you.

Called a FICO score, which is based on a complex formula created by Fair, Isaac & Company, your FICO score is widely used to evaluate whether you will be granted credit and at what rate.

Your score also determines auto and homeowner insurance rates, mortgage rates and more. Most of us want the best FICO score we can get, and to help toward that end, Fair Isaac has decided to market additional services directly to consumers.

For a fee, Fair Isaac will teach you how your score is compiled and how to improve it. People planning to refinance mortgages can learn to get better interest rates by upping their credit scores.

Another fee-based service lets you know if someone is stealing your financial identity.

You can learn about your FICO score on the internet at myfico.com. For $12.95, you can see your FICO report online for 30 days.

As part of their website, Fair Isaac has The FICO Score Simulator which can help you answer the question, "What happens to my FICO score if I make certain changes to my personal finances, such as pay off a credit card, open a new account or declare bankruptcy?"

This allows you to try out different ways to raise your FICO score.

Although the opportunity for consumers to learn to improve their credit scores is not perfect, it is worth it for most of us to delve more deeply and understand these scores better.

The scores range from the 300s to around 850, with higher scores indicating lower risk. Many lenders reserve their most favorable quotes of rates and fees for applicants with 700 and above.

Low FICO scores result in higher charges for many financial products. Some people can raise their scores by canceling unused credit cards. In other cases, avoiding additional debt and making sure there are no errors on your credit report helps.

If you would like to have information about how to obtain your credit report, send a self- addressed, stamped (34c) business size envelope to Maryland Cooperative Extension, Washington County Office, 7303 Sharpsburg Pike, Boonsboro, MD 21713. Mark the envelope, "Credit."




Lynn Little is a family and consumer sciences educator with the Maryland Extension Service, Washington County.

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