Whether you are buying a home, improving your credit, guarding against identity theft, starting from scratch or just curious, there are a few things that everyone should know about credit. The following five facts are commonly misunderstood but key to keeping your credit healthy.

 1.  You have three credit reports – Most know that they have individual credit reports from TransUnion, Equifax and Experian. Each of these three national credit bureaus independently collects and maintains financial records on consumers. This means that the information on each of your credit reports could be significantly different. Since you don’t know which bureau will be used for your next application, it’s important to check all three credit reports at least once a year. Service First obtains these reports in a 3-in-1 credit report for a borrower at loan pre-qualification.

 2. Checking your credit is safe – Contrary to popular rumors, checking your own credit data will not harm your credit score. Hard inquiries only occur when a lender or creditor checks your credit for the purpose of an application. You can safely check your own credit reports and credit scores as often as you like without worrying about damaging your credit.

3. Negative information expires after 7-10 years from the last report date or last activity date – A fundamental fact about the credit reporting system is that negative records, such as late payments and bankruptcy filings, remain on your credit report for a specific 7-10 year term. This expiration date does not change when you pay the debt or make changes to the account (except in the case of tax liens).  Positive records, such as closed accounts that were never paid late, can stay on your credit report longer than seven years.

4. Keeping active is key – One of the most important things you can do to keep your credit healthy is to use your credit actively. Use at least one credit card each month and pay all your bills on time in order to consistently add new positive information to your credit report. If you allow your credit cards to go dormant or close too many accounts, this positive reporting slows down and your credit score could drop. The longer you keep up your stable credit activity, the better your credit score will be.

 5. It’s up to you – Creditors and credit reporting agencies work diligently to maintain accurate records on consumers, but with millions of updates being made each day, mistakes can happen. When it comes to credit report accuracy, your input is crucial. Only you can identify and report certain kinds of inaccuracies, including errors made by your creditors and signs of identity theft. Review your credit reports regularly to check that the information reported is accurate and file disputes when you need to make corrections.

It’s important that everyone understands these five facts, but this isn’t all there is to know about credit. You can read more articles on credit and download helpful worksheets online in our Credit Learning Center (http://www.truecredit.com/help/learnCenter/welcome.jsp?mn=50275) today!


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