The Link Between Debt Prevention and Your Credit Report

From a financial perspective the importance of an individual's credit can not be overestimated. Credit can play a large role in determining such things as loan approvals, interest rates, and even employment opportunities. With so much at state it is certainly in an individual's best interest to review their credit reports on a regular basis to make sure that the reported information is accurate and up to date. A failure to take this precaution often causes damage to those who can least afford it: people who cannot easily handle the payments associated with higher interest rates, or those who may be denied approval for a debt consolidation loan. Since poor credit can have such a negative impact on a person's life it is critical to be on guard against some of the common inaccuracies that occur on credit reports.

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• Crossed identities. There have been many instances where your credit may be mixed (or replaced) with another individual. This other person generally has a name which is very similar to your own.
• Payment information. Verify that payments have been recorded as paid and current. If this information is incorrect it could be the result of a simple human error.
• Unauthorized charges. Beware. These charges are often the result of fraud. Make sure and contact your creditors immediately to report the incident.
• Credit Inquiries. A high number of inquiries can reflect poorly on your credit score. Be aware that a creditor can not run your credit without your advanced approval.
• Identity theft. If this crime has occurred you will often notice new accounts have been opened fraudulently under your name. Often these thieves will also run up the balances on your existing accounts. If you suspect that identity theft has taken place contact the proper authorities immediately.

Prevention is the key to avoiding damaged credit as a result of reporting inaccuracies. It is wise to check out your credit report from each of the three major credit reporting agencies (Trans Union, Equifax, and Experian) on an annual basis. The cost is minimal and well worth it. If you find an error on any of your reports than quick action should be taken to initiate corrections.

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About the author:

Mark Carney is a professional consultant with First American Debt Consolidation and Loans, a debt consolidation service specializing in financial education, credit counseling, and debt management services nationwide.