During the course of our day to day lives, we come into contact with many different kinds of documents, but few single documents will have as much of an impact on our financial lives as credit reports.  These documents are vital to our ability to buy a home, take out a car loan, or even land a job.  It is important for every consumer to know what credit reports contain, and how to correct any inaccurate information.

One important thing that many people do not know about credit reports is that they are used for much more than simply making lending decisions.  In fact, many employers routinely review the credit reports of job applicants prior to making a hiring decision.  These employers theorize that those who have a long and stable credit history are likely to be reliable and honest employees.  Whether this is the case or not, it is important to be aware of the fact that many employers factor a potential employee’s credit rating into the hiring decision.

In addition to employers, many automobile insurance companies factor credit reports into their insurance rates as well.  That is because studies have shown that there is in fact a correlation between credit ratings and accident claims, with those who have the poorest credit reports more likely to file claims on their automotive insurance policies.  This means that those with poor credit reports are likely to face higher insurance rates than those with cleaner credit ratings.

What all this means to you is that it is more important than ever before for every consumer to take a look at what is in his or her credit report.  Fortunately, credit reports are easily available from a number of sources on the internet, making it easier than ever to check for potentially costly errors.

After you have received a copy of your credit report, it is important to carefully check that report for any errors.  If you spot an error, such as a paid off account that still shows as active, or an overdue payment that was actually made on time, it is important to report that error to the credit reporting agency as quickly as possible so that it can be resolved.

It is also important to follow up in a few weeks to make sure that the erroneous entry has been removed.  It is vital to take this extra step, since any potential lender will look first to your credit report and credit score to make a determination.  Any negative information in those credit reports could result in a higher than necessary interest rate, or even in you being turned down for the loan. 

And it is unfortunately all too common for credit reports to contain errors.  As a matter of fact, a survey of credit reports pulled at random found that nearly half contained erroneous information.  This report, compiled by a consumer watchdog organization, is further proof of the need for every consumer to carefully review his or her own credit report and correct any errors that are found there.

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