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Extra Credit

Updated: Aug 31, 2022

March is National Credit Education Month! This month is all about learning the ins and outs of credit – what it can do for you, how you can use it, and the best way to look after your finances with it. Your credit report is a great place to begin when wanting to better understand your current credit position. Following are six of the key items that appear on a credit report, with tips on how to fix any errors you may find:

Is your name, Social Security number, address and other personal information accurate? If not, contact the credit reporting agency about the error. A lending company would be skeptical of making a loan to someone whose name and address (as listed in the credit report) are not consistent with the information provided to assess the loan.

The report will detail all of your open credit card accounts, highlighting your credit limits, whether you have been paying your bills on time and if there are any balances on the account. You should pay particular attention to the accuracy of this information because lenders use it to decide whether they’ll make a loan. Inaccuracies in this section are a major reason why many loans are rejected.

Credit reports also detail information on any mortgages you may have outstanding, any late payments, the account number of the loan and the date of mortgage origination. The same information is available for any other loans that you may have outstanding, including personal loans, home-equity loans, credit lines and other financing originated by a financial institution. It is absolutely essential that this information be correct. If a lender feels you have too much debt (even if the information is incorrect) the lender won’t approve you for another loan.

Credit reports will identify whether you have any accounts that are in collection and what the status of those cases is. Because this information can adversely impact your overall credit score and affect whether you are able to obtain a loan, it is important that it is correct. Credit reporting agencies often offer services that will help you resolve these issues or provide you with general advice and strategies on how to improve your credit score.

If there is a judgment or an award against you in a court of law (stemming from a personal suit, small claims matter, etc.) those terms will be included on the report. Should an individual or some other entity have a lien on your property, that information will also be made available. Specifically, the case number, the court where the lien was established, the amount of the lien and its resolution (whether the lien has been released) will also be detailed.

Bankruptcy information is also available and should be checked, as well. Specifically, the report will outline whether it is an individual or a joint bankruptcy (with, for example, a spouse). It will also include the amount of assets you have and the liabilities you have incurred.

There is a space at the bottom of each section of the credit report where you may add your personal comments. For example, in a lien situation, you might say that the lien was established due to a misunderstanding with a vendor (and/or that it was promptly satisfied). The space may be used to outline other discrepancies as well. You may also choose to briefly explain why you are behind on a certain debt payment.

Try to obtain your credit report at least once a year and review it for any inaccuracies. If you spot any errors, have them fixed as soon as possible.

This material is for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

Securities offered through LPL Financial, member FINRA/SIPC. Investment advisory services offered through CSi Advisory Services, a registered investment advisor and separate entity from LPL Financial.

RP-07832-0818 Tracking #1-762215 (Exp. 08/20)
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