Credit reports, produced by credit bureaus, detail your financial history, and are used to develop credit scores. Under federal law, you can get at least one free report from each of the nationwide credit bureaus every 12 months. If you find an error, contact the credit bureau directly and correct the record.
If you cannot qualify for a regular credit card, consider a no-fee or low-fee secured credit card. This is a credit card for which you would keep money (as collateral) in a deposit account at the financial institution issuing the card. For example, if you want a card with $1,000 limit, you might deposit that amount into a savings account at the bank offering you the card. The lender would report how you manage the card to one or more of the credit bureaus, and often it will provide you the opportunity to obtain an unsecured credit card after a certain period of on-time payments. Secured cards may have fees attached to them and may have a higher interest rate, so be sure to do your homework before signing up.
To order your free annual report from the three major credit bureaus—Equifax, Experian, and TransUnion visit www.AnnualCreditReport.com or call toll free 1-877-322-8228.
You have the right to see and correct reports from “specialty” credit bureaus that, for example, track a person’s history of handling a checking account.
For more information, go to:
Building a better credit report
Teaching Suggestions
- Ask students to visit several websites that may provide current information about credit files.
- Bring to class examples of credit related problems of individuals or families. Suggest ways in which these problems may be solved.
- Ask students to talk to a person who has discovered an error on his or her credit report. What was their experience to get it corrected?
Discussion Questions
- What steps can you take to improve your credit score?
- Which federal laws protect your rights if your credit application is denied?
Melissa Hart
Focus on Personal Finance, 7e 