Understanding Credit Basics and change your life, for free!

Throughout your life, at some point you have heard the word "credit" used in a description. What we can do now is to go over some of these credit starting points to help ease some of the concerns and give you a starting place.

To weigh the significance of your credit, it's valued like your reputation. By paying your debt charges on time, you're credit stays in a good standing. It might seem that simple, but it really isn't.

The reason that credit is important is if you are looking for a credit card, loan, or getting a low interest rate for any of these, your credit rating will dictate if you do get approved and what kind of interest rate you'll get as well. Getting any kind of loan with a decent interest rate might be difficult if you have credit problems.

Your credit score is something else you will hear about. This is the number that is assigned to your credit history. They look at your spending habits and how well you've made your payments on time. Your credit score ranges from 300 to 850 where most are looking for a score of 660 and higher.

Just so you have an idea, here are some factors that determine your credit score:

1. Have there been any late payments?

2. How have you used your credit? If you have more than one credit card and they are maxed out or close to the max, you are more of a risk.

3. What is the length of your credit history? If you're 18, you will pose a greater risk than a person that is 40 years old.

4. How many times you have applied for credit? Every time you apply, it gets recorded. Apply often and it will greatly impact your credit.

5. The different types of credit you have. There are different types of risks than others.

Now you have a few basics, you should be wondering what is next. Getting an actual copy of your credit report is what you need. There are three companies that report on your credit - Equifax, TransUnion, and Experian. By request, each of these companies are required by The Fair Credit Reporting Act (FCRA) to issue you a free copy every 12 months.

This is your first step. Have a credit report sent to you by each institution so that you will be able to examine your credit history.

What to do to dispute your credit report

The FTC recommends that if you want to dispute an item on your credit report, the best way is by mail. They are going to call for to see proof of your dispute so be sure and gather all of these things up. If a recent payment is reported that you know isn't correct, attach a copy of something like a online receipt or testimony that shows otherwise. When you do this, there is no way you can be denied. So many people insist that the reporting agencies "take their word for it" but it never really works out for them.

Be sure and send your dispute by certified mail and make sure you request a return receipt. The credit agency is bound to examine your dispute within 30 days unless they consider it without deservingness. When the investigation is over, the agency has to reveal back to you the outcomes in writing and if there will be a change or modification to your credit report.

If you get adjustments made in your favor, there are a couple of options to you that I highly advise you take advantage of. If anybody requested a transcript of your credit report within the last six months, they will report to them any adjustments made. If a copy was requested based on your employment, you can request that the corrections be sent to them as well up to two years before.

Fixing your credit report is definitely not a fun task. It's aggravating, tedious, and you need to keep good records. But, in the end, the time and effort are more than worth it by making things so much easier for you.

Jim is an active pursuer in helping people young and old to get back to school. His passion is helping those obtaining student loans and grants to make it that much easier.