The following information is an excerpt from Building a Better Credit Report, published by the Federal Trade Commission (FTC). To view a complete copy of this booklet, click here.
If you’ve ever applied for a credit card, a personal loan, or insurance, there’s a file about you. This file is known as your credit report. It is full of information on where you live, how you pay your bills, and whether you’ve been sued or have filed for bankruptcy. Credit reporting companies sell the information in your report to creditors, insurers, employers, and other businesses with a legitimate need. They use this information to evaluate your applications for credit, insurance, employment or a lease.
Having a good credit report means it will be easier for you to get loans and lower interest rates. Lower interest rates usually translate into smaller monthly payments. Nevertheless, newspapers, radio, TV, and the Internet are filled with ads for companies and services that promise to erase negative information on your credit report in exchange for a fee. There may be some items on your credit report that they can help you remove but most of the negative items will require time and concerted effort on your part in repaying your bills in order to get them removed or satisfied. Many of the items that credit repair agencies can help you get removed from your credit report may reappear on your credit within only a few months.