Credit reports are often regarded with fear, especially by those who have entered turbulent financial waters. But reality is never your enemy, even when it is unpleasant. In order to promote financial health, and resolve any debt problems you may have, it’s essential to have the best information possible about your credit status. To start freeing yourself from debt, you must know your starting point. Assemble a balance sheet and request free copies of your credit report to determine what you need to work on first. Much of your critical financial information is stored in your credit reports.


In the U.S., those reports are maintained by the three major credit reporting agencies: Equifax (PO Box 740241, Atlanta, GA 30374), Experian (PO Box 2002, Allen TX 75013) and TransUnion (PO Box 2000, Chester, PA 19022).

The reports contain a multi-year history of your credit cards, home loans and other debt. They also record any late payments that have occurred and how late they were whether it be 30 days, 60 days, etc past due. The reports will list any current and old addresses and often your phone number and social security number.

That information is readily available to any qualified party - a bank, a mortgage lender, a credit card issuing company and certain others during legal proceedings. But, though the companies all genuinely try to maintain accurate records, the reports may contain errors and often contain inaccuracies that may harm your credit rating.

They may list loans as active that have been paid off. They may list current credit cards you canceled long ago. They may fail to list payments made to make up overdue amounts. They may show accounts that you were added onto as a family member that you no longer want to maintain. Often the inaccuracies aren’t due to sloppiness on the part of the credit bureaus but simply a reflection of timing, inaccuracies reported by lending institutions and other common human errors in keeping records. The world may be computerized, but those databases still don’t always communicate effectively between companies using different systems.


The only thing an individual can do about this - out of self-protection, if nothing else - is to get copies from all three agencies and review them thoroughly. Make a note of any errors, establish proof of the error, then send a registered letter with the proof to the agency asking them to correct the data. Often calling the lenders that are reporting the inaccuracies is a good start as they may be able to clear up issues for you or provide proof that the data is inaccurate which will help your effort to clear the instances off of your credit report.

Thanks to recent legislation, you can obtain one free copy of your credit report per year. There are numerous ways to do that by filling out a form online or calling. One way is to go to: annualcreditreport.com.

On a more positive note, having the information at your fingertips allows you to develop a debt-free plan for your future. Understanding your past credit history is the first step in creating that plan.

Review your history and note any current overdue amounts. Clear those up first, as quickly as possible. One method is to pay off any smaller outstanding amounts first. That frees up funds to be used on the next larger outstanding amount. Working your way up, you will eventually begin to see light at the end of the tunnel. This concept of compounding your payments to pay off debt quickly will be discussed in a future post on this blog…stay tuned!