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The Ohio Department of Aging

Ohio Department of Aging Boomerang: It all comes back to you!

Boomerang: It all comes back to you!

My Future - January 2012

"Clean up your credit now! We can fix it for you!"
Don't be fooled. You are the only one who can fix your credit score.

Planning to buy a new car, major appliance, or even a new house this year? Do you know what your credit report is saying about you? Your credit report is a blueprint of your financial behavior and responsibility. With that information, lenders can predict with some accuracy how likely you are to repay a loan and make payments on time. Companies use your credit report information to decide if you will get, or be denied, credit, a loan, insurance, an apartment or home loan or even a job.

Companies are not the only entities who can use your credit report. You can, too. The information in your credit report is what scoring companies such as FICO use to generate your credit score, a three digit number. The higher your credit score - the better. By learning what is in your credit report, you can use that information to help adjust your credit behavior and improve your credit score.

Federal law guarantees you access to a free credit report from each of the three nationwide reporting agencies - Experian, Equifax and TransUnion - every twelve months. Each reporting agency's report displays information slightly differently, so it is a good idea to check all three reports. You can order all three reports at the same time, or you can order the different reports one at a time. The latter option gives you the ability to effectively get three free reports a year. Doing so will allow you to view more current information.

To access your free reports, call 1-877-322-8228 or go to www.annualcreditreport.com. This is the only authorized source of the free credit reports provided by law. Be wary of imposters and scams. Other websites and companies may promise a free credit report or credit score, but these usually come with strings attached.

Your credit report lists several factors including:

  • Payment history - whether you pay your bills on time or miss a payment.
  • Outstanding debt - how much you currently owe. The more credit cards you have at their limits, the lower your score will be.
  • Credit history - the length of time you've had credit. The longer you've had established credit, the better it is for your overall credit score.
  • Credit inquiries - new credit. Opening new credit accounts will negatively affect your score for a short time.
  • Types of credit - Having a mixture of different types of credit accounts results in a higher credit score.

Some of the information on the report is out of your control, such as reporting errors, mistakes, outdated information or errors due to identity theft. Each reporting agency has a reporting procedure so you can correct those errors.

You do have control of all the factors that have the biggest impact in your credit report. Do you make late payments or miss them altogether? Have you maxed out all your credit cards and make only the minimum payments? The general guidelines for cleaning up your credit report include paying your bills on time, limiting the amount of outstanding credit, and resolving outstanding bills.

If dealing with your debt is too much to handle, consider a non-profit credit counseling service. A counselor will examine your situation and work with you to develop a spending plan - usually with a small start-up and monthly maintenance fee. You can find an accredited credit counseling agency in your area through national associations, such as the National Foundation for Credit Counseling (NFCC) at 1-800-388-2227.

If you choose to use a credit counseling agency, the NFCC recommends you ask:

  • Is this agency a nonprofit organization?
  • How much will these services cost, including "donations" required?
  • Are agency services confidential?
  • Will you design a plan tailored to fit my needs?
  • Are the counselors certified?
  • Are budget and credit education opportunities offered?
  • Will my funds be protected?
  • Is the agency accredited by a prefessional organization?

You can't fix your credit information and history overnight, but you can fix it. You do it by changing the behaviors that got you in this mess to begin with. It will take time, but you can do it. It is in your control.

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