Have you ever paid your mortgage late?  What is the outstanding balance on your Visa card?  Did you ever default on a loan?  Credit bureaus have files on 90% of American adults.  These files contain information about judgments, liens, and bankruptcies, as well as your credit card and loan amounts.  As Americans carry more debt and have access to more lines of credit, banks, credit grantors, employers, and other interested persons are obtaining and using credit reports.

        Before approving mortgages, lenders use credit reports to check your character, credit rating, and capacity to make payments.  Errors in your credit report can cost you the loan.  The three most common mistakes in credit reports can be deadly to a consumer.  The first is misposted accounts due to similar names.  Although addresses and social security numbers are supposed to help report credit to the proper name, this information can be entered incorrectly – mistakes happen.  The second occurs when multiple entries for the same account or previously closed accounts appear on the record.  To a lender, extra accounts can mean too much debt or excessive credit with which a mortgagor can quickly run up debt and default on a loan.  The third and most serious mistake, however, comes from disputed or improperly reported items.  If the credit report has an incorrect outstanding balance that is too large, or shows that you are delinquent on your accounts, lenders will see a bad credit risk and deny your loan application.

        Employees should also be wary.  Employers can obtain copies of your credit report for “legitimate business needs.”  Reports can be used to make evaluations for employment, promotion, transfer, or possible termination.  Employers can also use credit reports to determine whether or not to grant an employee a security clearance.  Employers often use credit reports to determine how employees handle their own finances and to check on their character – especially if that employee will be handling money on the job.  The law does not require an employer to notify you before obtaining the report.  However, the employer must tell you if the information contained in the report is the reason you were denied employment or promotion.

        Once the employment relationship ends, employers are no longer entitled to access your credit report.  For example, an employer has no right to the report of an employee who has quit, even if the employer suspects the employee was involved in embezzlement.  Nor can employers run credit checks on former employees for use in wrongful termination or other employment litigation.

        The best way to prevent your credit report from hurting you is to check it before buying a house or looking for a job.  This is especially important if you were previously married and have not checked your report since the divorce.  Your ex-spouse’s negative credit postings may haunt you by showing up on your report.

        Straightening out your credit history can be a long, frustrating process, but is well worth the effort.  Remember, while bad credit can hurt you, good credit can help you.

HOW TO CLEAR CREDIT

        Contact the three major credit bureaus to obtain copies of your report.  This ensures a thorough check, since the three bureaus do not share information.  There may be a fee for a report.  If you find a mistake in any of the reports, file a consumer dispute form with the applicable credit bureau, which is then required by law to investigate the complaint (usually within 30 days).  The creditor must verify the disputed posting or it will be deleted.  If the creditor verifies the posting, you can make a short statement explaining why you think the posting is wrong.  This statement will be included with your credit report.

        Contact the creditor and try to resolve the dispute.  When it is resolved, have the creditor send confirming letters to all three credit bureaus.  In 30 days, obtain a new copy of your report to verify that the errors have been corrected.

NUMBERS TO CALL FOR CREDIT CHECKS:

	Confidential Credit:                (800) 443-9342
	EQUIFAX:                            (800) 685-1111
	TRW Consumer Assistance:  (800) 392-1122

(See your yellow pages under “Credit Reporting Agencies” for local services.)