Credit & Credit Reports

Dictionary.com defines credit as “confidence in a purchaser’s ability and intention to pay, displayed by entrusting the buyer with goods or services without immediate payment.”

We use credit in many different ways:
· We purchase or upgrade a house with a mortgage or home equity loan.
· We purchase a car with a loan.
· We buy furniture on installment.
· We purchase groceries and other items with a credit card.

Our ability to obtain credit (or get better credit on better terms) is impacted by our credit history and, by extension, our credit score. You can see your credit history by getting a copy of your credit report – which contains information about your past and present credit transactions. Potential lenders use your credit report to evaluate your creditworthiness.

By law, every consumer is entitled to a free copy of their credit report every 12 months from each of the three major credit bureaus: Experian, TransUnion and Equifax. For information on how to order your free copy, visit the Federal Trade Commission’s website at http://www.ftc.gov/freereports.

Each of these credit reports contains essentially the same information, so one bit of advice is to order one credit report every four months – that way you can see your credit history three times per year. For example, get your Experian report on January 1, your TransUnion report on May 1, and your Equifax report on September 1.

Next: Understanding your credit report and what to do if you find errors.