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Credit Repair: Why Should I Fix My Credit?

Credit Repair: Why Should I Fix My Credit?

After receiving a copy of your credit report you may notice some inaccurate information and wonder why it matters. Many consumers gloss over such inaccuracies and think to themselves it can't be that important. Besides, fixing a credit report is probably a time-consuming and difficult process so why even bother. Credit reports are referenced all the time and often for more than just applying for a credit card or loan. Keeping a credit report as accurate as possible should be a top priority for all consumers.

Most consumers know that their credit report is checked whenever they apply for a mortgage or auto loan. It is used for insight to determine whether or not a potential borrower is financially responsible and trustworthy with money. Do they show a pattern of making payments on time? Are they overextended and carry too much debt? Do they know how to manage different types of loans at the same time? The more accurate a credit report is the higher a consumers credit score which leads to more loan opportunities at better interest rates.

Interest rates is a key consideration many consumers forget about since their only concern usually about qualifying for a loan. Higher credit scores, which are based off a credit report, receive better interest rates. If the interest rate difference on a 72 month auto loan is 7.5% with poor credit and 3.5% with great credit it can mean thousand dollars in interest over the years. Negative marks and errors on a credit report don't just limit financial opportunities, it actually costs more money over the long run.

Credit reports are also commonly used for potential hires when applying for employment and for renters looking to lease an apartment or house. Using credit reports in this manner is a more recent development because analysis have been conducted proving a correlation between a consumers credit report and how they behave as employees and renters. If someone is responsible financially by making payments on time and having a low debt utilization ratio they also tend to be responsible in other aspects of their lives. So having errors on a credit report may not just prevent you from getting a car loan but it may also lead to extended unemployment and homelessness.

It's not just inaccuracies and erroneous information that appear on credit reports. Fraudulent activity resulting from identity theft is another reason to be proactive. Identity theft is one of the primary reasons why a law was passed allowing consumers to receive one free credit report per year from each of the three major credit reporting bureaus. You can receive a copy of your free credit report by going to www.annualcreditreport.com or calling toll-free 1-877-322-8228. Since you can get three free credit report per year, it is best to request one every four months from a different credit agency. If you notice inaccuracies be sure to use the free online correction form provided by each agency on their respective websites.

Implementing a credit repair strategy to fix your credit is crucial to being financially successful. A credit report impacts all aspects of consumer's life. By removing black marks, paying down debt and fixing inaccuracies you will have more options to do what you want while saving money. Fixing credit can take years but it is important which is why many consumers take the time and make the effort to fix their credit by any means necessary.