Credit Report Card: How To Manage Your Credit Report and Maintain (Or Rebuild) Your Score

December 4, 2012  |  

If you’ve ever tried to make any kind of major purchase — a house or car, for instance — then you know that your credit score will quickly come into play. Some companies are even using a credit score as an indication of a candidate’s fitness for a job.

“An employer might rightly consider a low credit score to be a sign of poor decision-making, irresponsibility, or inability to meet deadlines. Plus, it [likely] won’t make you a sterling candidate for any job that requires handling money,” Forbes reports.

It’s a sentiment seconded by Rod Griffin , the director of public education at credit score reporting company Experian.

“I talk about credit information , so I should have good credit,” Griffin says, as a for instance. He’s been with Experian for 15 years.

With so many things dependent upon a good credit score and so many people trying to either maintain or rebuild good credit, it’s a good time to go over some of the basics of that all-important document — the credit report.

In terms of its use as a tool for assessing a job candidate, Griffin estimates that that’s done in “only five to 15 percent of hiring decisions,” he told us. Besides its use to determine a person’s competency for a job, it’s also a way for employers to confirm your identity and other information provided during the vetting process. No matter how it’s used, “in order for a potential employer to get a copy of a credit report, you have to give written permission,” Griffin reminds us.

Overall, he adds, your credit report isn’t pulled as often as you would think. Credit scores can be impacted by the number of times that a report is requested. A “hard” inquiry, for example, would be an application for a credit card. “You’ve initiated a transaction. This will be shown to other lenders. It can represent new debt that isn’t shown as an account,” says Griffin. In other words, be careful with the number of credit cards you apply for.

However, if a number of requests are made because you’re seeking a car loan or mortgage, the inquiries are lumped together into a single inquiry, in which financial institutions and others looking at the report will understand that the consumer is looking for the best deal. “Inquiries will never be the reason for someone being denied credit,” Griffin says.

And, of course, your credit report speaks to how you manage your debt. “The most important piece of information is whether you’re paying on time,” says Griffin. “If you’re late, that will have a big impact on credit score.”

Don’t forget the basics either. According to Michelle Thornhill, SVP of diverse segments at Wells Fargo bank, just looking over the basic data — name, address, and account numbers — is a big deal. Making sure it’s correct is critical, and if you’ve gotten married or moved, there could be confusion that needs to be cleared up. (She also says you should pay special attention to that aforementioned section on inquiries. “People might be applying under your name,” she warns.) If you find errors, contact the companies that have made them immediately.

Raised Awareness

In recent months, it seems there’s no shortage of concern over personal credit scores and credit reports. In part, that has to do with raised awareness about the importance of having a good bill of financial health.

“Certainly, the financial crisis we’ve been in in the past few years has led customers to want more access to their information,” Thornhill tells us. “Consumers are more diligent.”

You should take a look at your credit report yearly to make sure it’s accurate. Understanding what’s on your credit report is also important for rebuilding your credit.

“Take an honest look at where you’re spending your money, what can be changed and what can’t,” says Thornhill. “First and foremost, it’s about understanding your household budget.”

Once you get a grip on what’s coming in and going out, you can make arrangements to pay off debt, decide whether you need to make more money either through a new job or something on the side, and determine whether you need help — maybe from an advisor or personal finance app — to keep your money in order.

And, more than anything, don’t get discouraged. When you have blemishes on your report, it’s easy to get down on yourself, or feel you’ve dug a hole you can’t get out of. For instance, a foreclosure or bankruptcy will stay on your record for seven years, generally speaking. Other public record information, like a tax lien, is also going to show up. But you can note special circumstances, Thornhill says, such as the death of a spouse, which may have impacted your financial status. Start saving, even if it’s just a little something for an emergency. To give your credit a little boost, there are times when positive rent payment information can be included. Or get a secure credit card and, as we mentioned, stay current.

“It’s keeping up and abreast and managing your finances so you’re not in that situation again,” says Thornhill.

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