As part of your personal financial responsibility, you keep track of the information on your credit report by requesting a free report from each of the three credit reporting agencies each year. As you verify all of the information that is show to make sure that no errors have been made and that no one has stolen your identity, you may wonder just how your credit history compares to others.

It is hard to know if the information on your credit report shows you as a person who is financially responsible. You just have to hope that your credit scores and payment history do not work against you when you apply for a new loan, a new job, or even a new place to live.

Interpretation of Your Credit Report

Lenders determine the risk that they will face when they approve a loan or line of revolving credit, and the ways that different types of lenders interpret the information that is on your credit report may differ, depending on the type of loan or credit you are asking for. Although there is no specific guidelines that are set in stone, you can get a good idea from your credit score.

Excellent score – If your credit score falls between 760-849, congratulations. You fall in the group of highest scores. You should be able to find approval for most loans and secure them at the best interest rate that the lender is able to offer.

Great score – If your credit report shows a credit score of between 700 and 759, you should still expect to be able to secure a loan with a good interest rate.

Good score – 660 to 699 is considered a good credit score and you should not be denied a loan or penalized with an escalated interest rate. There is a lot of room for improvement, but you should feel confident of success when seeking a loan with a good interest rate.

Fair score – Expect to pay a higher interest rate on lines of credit or approved loans if your score is between 620 and 659. You may find that in some cases certain lenders won’t approve certain types of loans, but if you shop around and compare rates you should be able to find a place that will approve your application, but will charge a bit more interest to balance their risk.

Poor score – Once your credit score drops below 620 you can expect to start running into difficulties securing a loan or a line of credit. If you are willing to find a lender who is willing to take the risk, expect to be charged very high interest rates.

If the credit score is below 580, you may not qualify for credit at all. It is time to get down to business and work to get the score back up.

Examining your credit report carefully should give you an explanation of why your credit score is what it is. If your history shows that you manage a variety of credit responsibly, you will have a higher score. If your history is dotted with late payments, actions by collections agencies and even court judgments against you, your score will be lower.

Use the information on your credit report to help you take the steps that you need to portray yourself as a financially stable person who can make good decision about money.

The Fair Credit Reporting Act gives to access to one free annual credit report from each credit reporting company. Experian, TransUnion and Equifax reports are available from AnnualCreditReport.com, and there are no requirements to pay fees or make a purchase of a product or service.

Some people  assume that because the law requires the three nationwide credit reporting companies to provide only one free report each year, they will have to pay for additional reports if they find the need them. This just is not true. In some cases, you can get additional credit reports without paying a penny.

Who Qualifies for Additional Free Credit Reports?

If you are unemployed and planning on starting to look for a job within the next thirty days, federal law guarantees you the access to an additional free credit report each year. It is important to know what is on your credit report as it will be included in the background check that most prospective employers require you to submit to as a condition of employment. If the credit report shows information that does not match your resume or job application, it could put the possibility of landing a job with that company at risk.

If you have been denied credit because of information that appears on your credit report, you have 60 days to request a free credit report, even if you have already taken advantage of the annual free report from the reporting bureau. When you receive notification that your credit application was denied due to an unfavorable credit report, the name, address and phone number of the credit bureau that supplied the information will be listed. Contact the reporting service to request the additional report that you are entitled to.

The same procedure for obtaining an additional free credit report should be followed if you are denied insurance coverage, employment or even housing because of information based on your credit report. Make sure that your request is made within sixty days of notification that your application has been denied to avoid having to pay.

People who receive financial assistance through welfare are also eligible to request a free credit report.

If incorrect information appears on your credit report, the reporting agency must investigate the questionable report and correct it. You have a right to request a free credit report once the errors have been resolved to that you can verify that the needed changes have been made. This only applies to the instances where the credit report had errors that needed to be corrected. If you request an additional report based on a dispute that was not substantiated and necessitated a change, the reporting company will charge you for the additional report.

When you order your free credit report, you will be asked to verify your identity by providing your name and address, date of birth and Social Security number. Very often, you will also be asked a question that only you can answer as further proof that you are who you claim to be.

Even though you are entitled to request a free credit report from each of the three major reporting agencies does not mean that you are limited to accessing your information. If you meet any of the requirements, request an additional report from the appropriate credit bureau.

If you have never requested a copy of your credit report or seen a sample credit report provided by each of the three credit reporting agencies, you may be surprised at the amount of information that it contains. Personal data that you safeguard from prying eyes is not private anymore once you have give your permission for a business or financial institution to do a background check or access your credit report.

Credit report information is used for a variety of reasons because it provides such a complete picture of your activities as well as your credit standing.  Information from public records, including arrest and court judgments can appear on your credit report as well as information about each line of credit that you have.

What Information Appears on Credit Reports?

There is a lot of private information on the credit report that you want to protect from identity thieves. This includes the account numbers of all of your open credit lines. If a copy of a credit report fell into the wrong hands, it could put you at risk for identity theft. Imagine what a person who had all of your private information could do to your personal history.

Your name, address and phone number will appear on the report along with your social security number. Employment information, including the address, job title and date of hire are also displayed. All of this information, along with the history and status of your credit accounts that include the account numbers could be enough information to allow a person to pose as you.

Some businesses and organizations need your permission to request a copy of your credit report, but you should limit giving authorization by knowing the specific reason that they are requesting the information.

When you are applying for a new line of credit, the reason for the request for access to your credit report information is reasonable. In order for the company to make a sound decision before approving a new credit line, they will want to make sure that you have a history of acting in a financially responsible manner. This means that they want proof that you pay your bills on time.

Finding employment also often means that you have to agree to a background check. This will usually include the potential employer requesting a copy of your credit report. When you fill out an application to rent a home, the application will often require that you agree to a background check that will show your former addresses so that the landlord can get information on what type of tenant you are. It will also include a criminal background check as well as a credit report.

Before agreeing to allow any business or organization to request the private information by way of your credit report, make sure that you understand the reason that they need it and how they will protect the information once they have it. If you feel that they are not justified in asking you for permission to get a copy of a report that contains so much personal information about you, refuse the request. This may mean that you will be denied the services or opportunity that could be provided, so each case must be examined by you individually. As a rule of thumb, if you do not believe that the benefit outweighs the risk, protect your identity by refusing to give permission.

Being able to handle your finances in a responsible way is important to you in more ways than you may think. When you sit down to pay your bills each pay period, trying to make the money stretch to cover all of the items in your monthly budget may be a struggle, but the importance of making those payments on time is obvious when you realize that your payment history will affect your credit report. Your ability to handle your finances will be looked at, with your permission, in all types of situations in your personal life.

A credit report says a lot about you. That is why it is so important to make sure that all of the information that is listed on it is correct. Before you are approved for a new line of credit, the report will be checked and an assessment will be made as to whether you are likely to pay your bill on time. It is not just unsecured credit accounts like credit cards that are impacted by the information on a credit report. If you are trying to secure a mortgage or applying for a loan to buy a vehicle or if you need other types of loans from a financial institution, not only will your credit report need to be in good standing for approval of the loan, it may also help determine the rate of interest you will be required to pay on the loan.

The credit report can also be seen by your employer. When you apply for a job, the company asks you for your permission to conduct a background check. This includes a credit report. When you attempt to buy insurance or rent a home, you may also have a background check run on you that will include a copy of your credit report.

Any company that you do business with plays a part in the information that appears on the credit report. If you let your utility bills fall behind, it can be reported to a consumer credit information collector and will appear on your report. The same is true with medical bills. This information is then made available to anyone in a position to request a copy of your credit report.

If you are able to pay down your credit debt and reduce the number of consumer credit accounts that you have to make payments on each month, it will help you with your long term debt, but do not expect a poor history to disappear like magic from your credit report. Legally, when an account is reported as being delinquent to a consumer reporting company, the information can stay on the credit report for seven years if it is accurate. Information about a bankruptcy can stay on the report for 10 years.

If you do not have outstanding loans or open credit accounts, it does not necessarily mean that your credit report will be considered good. The report is designed to give potential lenders and others a glimpse into your ability to handle your finances in a responsible manner. Without that credit history, a credit report will not be able to fill that purpose.

Your credit report contains information about you that can mean the difference between getting a new line of credit or not. Many employers obtain a copy of your credit report as part of the hiring process, and the information that is listed on the document may help them decide if you are the best candidate for the job.

It is important to know what is on your credit report and to make sure that the information is accurate. Any mistake on the report could cause you problems. A discrepancy on your credit report may also be the first indication that someone has stolen your identity.

Order a copy of your credit report at frequent intervals to make sure that people who make the important decisions about your ability to take out a loan, or are in a position give you a job, have the right information. These are not areas in you life where you need to be faced with an unexpected surprise.

Type of Information on a Credit Report

Your credit report conveys a lot of information about you in addition to your credit score. The information comes from a CRA, or consumer reporting agency. The agency will gather information about you and your credit and store it in a database. Information about your credit activities are then sold. The credit bureau is the most common consumer reporting agency.

Businesses who have done business with you are the main source of information that is collected by a consumer reporting agency. The businesses that supply the information could be one who has issued you a credit card, revolving charge account, or a financial institution where you have taken out a loan.

The types of information on a credit report falls into four categories:

• Identifying Information:  Your full name as well as any former names or known aliases will be listed on your credit report.  Current address as well as the previous places that you have lived will be reported, as well as your current place of employment and any past jobs that you have held. In addition, your year of birth and social security number will be given.
• Public Record Information:  Financial court records on a county and state level will be shown on your credit report. These records include bankruptcy, monetary judgments and tax liens. In many cases, other judgments against you, even if they are non-monetary, will be shown.
• Credit Information: The credit information on the report is quite extensive. Bank accounts, accounts that you have with utility companies, and credit accounts will be listed. Student loans, installment loans and mortgages will be listed along with other credit accounts from retailers and companies who issue credit cards. Each account will be accompanied by information on the date that the account was opened and the amount of the loan or the credit limit. Your payment pattern over the last two years will also be shown.
• Recent Inquires: There are many reasons that someone may seek information about you.  The names of the people who have obtained information from your credit report over the last year are listed so it is not automatically assumed that every inquiry is based on your financial activity. Names of businesses and people who have inquired about you for employment purposes remain on the report for two years.

Correcting your Credit Report

Once you obtain your credit report, go over it carefully to make sure that it is accurate. If you find any information listed that you do not agree with, contact the reporting agency immediately. Sometimes these discrepancies are the result of human error or mistaken identity, but at other times, it could mean that someone is using your identity and taking out credit in your name.

Once you have contacted the agency about the incorrect information, they must research your concerns and remove or change any information that is wrong. They have 45 days to accomplish this. The corrected report will then be sent by them to anyone who has received a copy of your credit report within the past 6 months.

If you have debts, it is natural that the creditor would try to collect. In order to collect, the creditor would use all means necessary including filing a case against you. You will be given 30 days to dispute the claim made against you. If you really owe the money, you should immediately try to contact your creditor in order to make a new payment arrangement that would be amicable to both of you. You will pay off your debts as long as they agree not to press charges. You should do this in order to avoid a judgment record on your credit history.

Whenever a debt remains uncollected, your creditor could take you to court. If you were found liable, then a judgment will be issued in favor of your creditor. You will be given another 30 days to file an appeal although it would be a waste of time, if the debt is really your responsibility.

Judgments like collection accounts, charge-offs and bankruptcies can lower your credit score significantly. A ruined credit report will mean difficulties in proving your financial credibility. Even as something as simple as credit card application can be rejected if you are not careful on how you handle all your credit. Removing judgments can actually be done in three ways.

Check Out the SOL

You should determine the SOL or statute of limitations for judgments in your state. On the average, these judgments usually stay on your credit report for seven years but its statute of limitations can last for longer. This is also the length of time that your creditors will have to try and collect the debt you owe them. If the SOL has expired, the judgment should be removed from your credit report if there were no renewals filed by the creditor. Any dispute should be reported immediately so that your credit history is updated and corrected.

Another way you can remove the judgment from your credit report is by negotiating with your creditors. In exchange for the payment of the debt, your creditor will have to request the dismissal of the judgment. The judgment entry will be removed from your credit report completely. Normally, when debts are paid after a judgment has been issued, a rating of “paid judgment” is entered. But if you negotiate removal then it would work wonders for your credit score. Of course, you have to document such agreement so that you will have something to show the credit bureau in case your rating did not change.

Lastly, you can remove a judgment by filing for a motion to vacate. In most cases, this motion is filed if the creditor sued you wrongly. If the court vacates the judgment then it will be removed from your credit report and you are not even obligated to pay your debts.

Learning about judgments is very important if you want to have a fighting chance of removing it from your credit report and protecting your credit score.