There is one powerful piece of paper that a select group of individuals read in order to get an impression of you. This piece of paper can open or close doors. Your personal finances, your employment, even your ability to receive cellular phone service all are influenced by this document. This sword of destruction or key to opportunity is your credit report. Many people do not understand how to effectively read their report. More importantly, they do not comprehend the gravity of what their report says about them. It’s important to know what sort of impressions and information people gather by looking at your credit report.

Your credit report is a concise listing of how you pay your bills. All of your credit card accounts and loans are listed. Other bills you pay may be listed also. Your phone bill payment history, electric bill history, and even your cable bill payment history may be listed if they have been delinquent or are in collections. To creditors your credit report is a financial report card. It’s important to realize that a creditor is anyone to whom you owe money.

Only certain individuals are legally authorized to obtain a copy of your credit report. Usually you sign a document giving your permission before this is done. That document could be anything from a credit card application to a rental housing application. The reason people look at your credit report is to assess risk. They want to know how risky it is to lend you money, rent an apartment to you, or even employ you.

Your credit report shows if all your open accounts are in good standing, the amount of debt you hold, how often you have been late paying a bill, and even how late your late payments were. Say for example, a landlord considering your rental application sees in your report that you have a history of late payments, that you have high monthly debt in relation to your income, or that you have accounts that have been charged off. More than likely they will not approve your application. In their mind you look too risky. They will assume your rent will be late, that at some point you will not be able to afford your rent, or even that you will be a difficult tenant. Making a character judgment based on the way you pay your bills may not be fair however, it does happen.

Some employers even look at your credit report. A good example would be if you apply for a job that requires you to manage money or physically handle money. Significant debt on your credit report may make the employer feel you are at risk for stealing money. A late payment history and/or irregular payment history could be used to imply you have poor financial management skills. In terms of character judgment, this may even cause an employee to question your honesty and reliability as a worker. Again, it may not be fair but it is reality.

It is imperative to regularly obtain copies of your credit report. There are now many services that offer reports of your credit history. However, the two major credit reporting agencies are Equifax and Trans Union. Most businesses report to these two agencies. A copy of your report can be obtained for a fee of eight dollars. If you are denied credit or any other privilege due to information found in your credit report you are eligible for a free copy. Remember that you can only get a free copy if the denial is within sixty days of your credit report request.

Incorrect information can be corrected by filling out inquiry forms that accompany your report. You indicate on the form what is incorrect and send it back to the agency. They will investigate your claim and report back to you in thirty days. When sending a request for investigation, make sure to send evidence in support of your claim. Evidence would be copies of cancelled checks indicating payments, “paid-in-full” letters you have received, or any other documentation showing the creditor in error.

If the inquiry proves you to be correct, your credit will be updated and you will receive a new copy. If the creditor(s) in question believe they are correct you will receive an explanation of why they feel they are correct and you can appeal accordingly.

Regardless of if the information is positive or negative, anything reported to a credit reporting agency stays on file for seven years. That is why it is so important to know what is in your file. In addition to knowing what your file says about you, it allows you to keep track of who has made inquires into your file. There is a listing of who has requested your credit report. If you do not understand why a business or person as made a credit inquiry you can ask them about it. Most importantly, if someone has made an unauthorized inquiry you can report it and find out what it was used for. Fraud may be involved.