The Fair Credit Reporting Act (FCRA) grants Americans the right to obtain a free credit report from the three main credit reporting bureaus once a year. These yearly reports are available from AnnualCreditReport.com. You can request a report by calling 877-322-8228 or by visiting the site and filling out a form. You can also request a report any time that a company turns down your credit request, decreases your credit limit or denies you employment because of information in your credit report.

Analyze your credit report and verify that the information is correct. Look closely at your name, Social Security number, current and previous addresses and your accounts and account numbers. If any of this information is wrong, either the reporting company reported the wrong information or someone might have stolen your identity. According to the FCRA, both the reporting company and the credit bureau must take responsibility for correcting any inaccurate information contained in your report.

Send a letter to the credit bureau informing them of the inaccuracies in your report. Include documentation (these should be copies and not originals) of the correct information. Be sure to note each error individually and give your reasons for thinking the information is wrong. An easy way is to make a copy of the report, highlight the errors and include the disputed information on a separate piece of paper.

By law, the credit bureau must investigate your dispute. The investigation typically takes 30 days or less. If the bureau considers your dispute to be frivolous, it does not have to investigate your claim. The bureau will send your information to your creditor, which must then investigate your dispute. If the creditor finds your dispute to be valid, it must notify all three credit bureaus, which must then correct your credit report.

If your creditor corrects the errors, you can request that the company send the changes to anyone that requested your credit report within the last six months or two years if the report was for an employer. If the creditor does not correct the errors, you can request that the credit bureau includes a statement on future reports saying that you disputed the information.

You can also dispute errors directly with the creditor. Contact the creditor to ask for the address to send the dispute to, as it could be different from the payment address. Include copies of your documentation with your dispute. Creditors that report to a credit bureau must notify the bureau of your dispute. When the creditor verifies that your information is correct, it must stop reporting the error to the credit bureau.

If you know that you are going to apply for a <a href="http://www.moneysupermarket.com/credit-cards/providers/tesco/">Tesco credit card</a> or any other type of credit, you should consider obtaining your credit reports before completing the application. This gives you the opportunity to correct any errors that might cause a creditor to deny your application. Careful monitoring of your credit report is essential in maintaining a good credit score.

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Paying Bills On Time

A person`s track record of paying bills on time is a highly important measurement, accounting for 35% of one`s total credit score. FICO determines this part of a credit score by examining an individual`s history in regard to making bill payments. Points are deducted for those who frequently pay bills late or who have had issues with collection agencies or bankruptcy. 

Available Credit and Outstanding Debt

Thirty percent of an individual`s credit score is determined by that person`s amount of available credit (the credit limits on existing cards) and amount of outstanding debt. If a person owes a significant amount of money to home lenders, auto lenders or credit card companies, a final credit score may be affected negatively. Similarly, if a person has an excessive amount of credit available, FICO considers that person to be a potential risk for big spending. The best way to achieve a high score in this area is to use credit occasionally rather than maxing out limits, or not use credit at all. 

Credit History

FICO looks favorably upon individuals who have done business with the same credit lenders over a long period of time. The longer that one has successfully used credit, the more likely it is that a high credit score will be achieved. Credit history accounts for 15% of the total credit score.

Applications For New Credit

People who have a solid history of paying debts on time are scored favorably if they have a pattern of applying for new types of credit. Consumers who prefer to shop around for the lowest loan rates can gain points that comprise 10% of the final FICO credit score. However, if one tends to run late on making payments or to avoid making them, applications for new lines of credit are detrimental to the overall score.

Types of Existing Credit

Ten percent of one`s credit score is measured according to the diversity of that person`s existing credit lines. Those who are responsibly able to manage loan payments and credit card payments simultaneously are considered by FICO to be good credit risks. 

Consumers should periodically review their credit scores to ensure that they are in a good position to apply for loans or enter into financial agreements. A good way to keep one`s credit score on track is to figure out in advance if a purchase is affordable. For example, using a <a href="http://www.simplyfinance.co.uk/calculators/mortgage-cost-calculator.html">mortgage calculator</a> will determine if one can manage monthly payments on a home.

 [tags]Bad Credit, Credit Repair, Credit Score[/tags]

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