These days, your credit history is almost as important to your personal finances as your bank accounts. This is because it can impact everything from your ability to get a loan to your ability to find a job. Yes, it’s true: your credit can have an impact on your job search.

One of the most common job search myths is that your potential employer can see your credit score. If you have a low score, it can definitely cause anxiety.

The good news is that employers can’t see your credit scores. However, there’s also bad news: Employers can check your credit reports, or at least a limited version of them. And, depending on the employer – and what they find – your credit history could lead to a denial letter.

What your potential employer can actually see

Employers can’t see your credit scores and don’t get the same version of your credit reports as lenders. But they still receive a fair amount of information about your financial situation.

An employer version of a credit check may include your:

• name
• Social Security number
• Address
• Current debts
• Payment history

In most cases, your potential employer probably already has your personal information such as your name and Social Security Number (SSN), which is often needed to complete the background check in the first place. Other than your SSN, personal information on your credit reports is available through a basic background check that includes a search of public records.

So really, it’s your current debts and payment history that form the crux of the report. This can include mortgages, auto loans, personal loans, or credit card accounts. Your credit reports will show the last balances reported, as well as whether you are up to date with your payments.

One thing to note is that employers – and potential employers – need your consent to check your credit. Many companies will include this as part of the initial job application.

Some industries may care more than others

How much weight an employer places on your credit history – or even whether they check it – can vary widely by industry and company. For example, if you’re looking to work at a local drive-thru service, your credit card debt probably isn’t an issue.

However, if you are applying for a job with a bank or credit bureau, your credit history could have a big influence on the hiring decision. After all, if you don’t consistently manage your own finances, a company may not want to hire you to manage theirs. Excessive debt can also be a red flag in some security-sensitive jobs, as some employers may think those with excessive debt are more likely to be manipulated from the outside (such as bribery).

If a business plans to reject your application based on your credit check, they are required by law to notify you – in writing – that they are taking “adverse action” because of your credit. The company is also required to send you a copy of your report so that you have the opportunity to dispute any incorrect information.

The best ways to clean up your credit reports

You have three major credit reports, one from each of the three major credit bureaus: Experian, Equifax, and TransUnion. You are normally entitled to one free credit report from each bureau each year, although you can get weekly reports until April 2022 due to the pandemic. You can access your free reports at AnnualCreditReport.com. (The site is secure and managed by the credit bureaus.)

As long as your credit history is in good shape – that is, you don’t have late payments, maxed out cards, or defaulted accounts – you probably don’t have to worry about knowing if an employer verifies it. However, if your credit history is not at its best, you may be able to clean it up.

The first thing to do when checking your reports is to make sure everything is there. If you do not recognize any accounts or if there are other errors in your reports, you can file a dispute with the credit bureau to have the information corrected. You will need to file a separate dispute for each incorrect item with each office.

If the problematic items on your credit reports are legitimate (in other words, if you really missed that payment, or if you missed that account), you won’t be able to get them removed through litigation. Instead, you might just have to wait for them to age your intercourse. Most negative items will automatically disappear from your credit reports after seven years.

While you are unlikely to lose most jobs due to your credit history, it is good to know where you are at and the potential red flags you may be facing. And, given the importance of your credit to your finances in general, this is information you should have even when you are not actively looking for a job.

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The information on the pages of your credit report helps determine the interest rate you will pay on a loan. It may also impact the ease of:

• Buy insurance
• Rent accommodation
• Get the job of your dreams

That’s an awful lot of power for a three-digit number, but it’s there.

The scary thing is that one in five Americans who check their credit reports find a mistake – one that can change the course of their financial life.

So what should you do when you find an error on your credit report? How can you fix it? It all starts with ordering the three free reports at annualcreditreport.com.

Typically, you are entitled to a free copy of your report from each of the three major credit bureaus once a year. Due to the pandemic, Americans can order a free credit report every week until April 2022.

Then go through the report and look for errors. This may include:

• A credit card you don’t recognize
• A bill from a place you’ve never lived
• An invoice that you have paid in full but still has a balance
• An address that does not belong to you

Every mistake, no matter how small, can have an impact on your credit. Highlight anything that doesn’t look right.

Now is the time to dispute any mistakes.

How to dispute errors on your credit report

Credit bureaus and any company that has provided incorrect information are legally responsible for correcting errors at no cost to you. Your only job is to dispute the mistakes. Here’s how:

1. Contact the credit bureau

It is possible that an error on one credit report does not appear on others. All you need to do is contact one of the three credit bureaus to initiate the dispute process:

2. Send a letter of explanation

You don’t have to worry about getting fanciful with the letter. A credit bureau only needs the following information:

• Your full name
• Your date of birth
• Your social security number
• Your current address
• Any other addresses you have had in the past two years
• A copy of your driver’s license or state ID
• A copy of an invoice (to prove that you are who you say you are and live where you say you live)

The important thing is to dispute inaccurate information. Print the dispute form from the office’s website, fill it out, and attach it to your letter. Or include a list of every item that is wrong. Make sure to include the account number and the reason why you think it is incorrect. Be as detailed as possible, and if you have any supporting documents, include them in the letter.

Some mistakes are easy to correct. For example, if you were born in 1980 but your credit report shows a mortgage taken out in 1982, it is quite easy to see that this is a mistake. If you find a credit card that has been fraudulently withdrawn in your name, the process may take a little longer, but you can still have it withdrawn.

Note: Send all correspondence by certified mail and pay for a “return receipt”. This is important because it proves that the credit bureau received your dispute and the date it was received.

3. Keep copies of everything

If you find more than one error on your credit reports, it may be helpful to create a separate file for each. Keep everything from correspondence to your evidence in this file. So if a question arises, you can answer it quickly.

4. Wait 30 days

According to the Federal Trade Commission (FTC), the credit bureaus have 30 days to investigate your dispute. If your complaint is unfounded, they will stop investigating. Even so, they should inform you of the reasons why they stopped the investigation and give you the opportunity to provide further evidence.

Suppose your dispute is about a late mortgage payment. During the 30-day investigation period, the credit bureau forwards the evidence you submitted to your mortgage company. If the mortgage company believes you are correct, they should notify the three credit bureaus so that the information can be corrected on all of your records.

5. Examine the results

After 30 days, the credit bureau must provide you with the results of its investigation in writing. If the dispute resulted in changes in your credit report, you also get another free copy.

If you ask, the bureau should send a correction notice to anyone who has retrieved your credit report in the past six months. If you have been refused a loan or offered a higher interest rate due to an error on the credit report, the credit bureau should send a corrected credit report to that lender after you requested it.

You can even request that a corrected credit report be sent to an employer if you’ve been turned down for a job because of your credit report in the past two years.

6. If things don’t go the way you want them to

If the outcome of the investigation does not resolve the issue, you have the right to include a dispute statement on your credit report. For example, if you think the late payments shown on the credit report are incorrect but you cannot convince the credit bureau of this, include a note explaining why you think it is wrong.

Now let’s say your payments were late, but it was because you were in the hospital with a fatal illness or because of a job loss. Include these statements because they help creditors see your credit report in a broader, real-life perspective.

Ben Franklin said, “In this world nothing is certain except death and taxes. If credit reports had existed at the time, it’s fair to imagine that Franklin would have added them to his list.

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We strongly believe in the Golden Rule, which is why the editorial opinions are our own and have not been previously reviewed, endorsed or endorsed by the advertisers included. The Ascent does not cover all the offers on the market. The editorial content of The Ascent is separate from the editorial content of The Motley Fool and is created by a different team of analysts. Ally is an advertising partner of The Ascent, a Motley Fool company. Dana George has no position in the stocks mentioned. The Motley Fool recommends InterContinental Hotels Group. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Here’s why it’s important to stay on top of your credit report.

There are certain tasks in life that need to be accomplished, even if they aren’t the most fun or engaging. For example, we all have to file our taxes, have our cars serviced, and take the time to have an annual medical check-up to monitor our health.

But just as you need to fit these tasks into your schedule, it’s also essential to set aside time to regularly check your credit report, ideally three times a year. Here’s why.

1. To stay on top of your finances

Your credit report is to a large extent a snapshot of your financial health. While this report won’t tell you how much money you have in savings or how well you are doing in your brokerage account, it will tell you how you manage your debt.

Specifically, your credit report will include a list of your open credit card accounts and loans, as well as your various balances. It will also show you how much of your available credit you are using at a time so you can see if you have a reasonable amount of debt or not.

2. Be on alert in the event of fraud

These days, no one is immune to financial fraud. Even if you follow smart practices to protect your personal information – like shredding sensitive documents rather than throwing them away – a criminal can still get a hold of your credit card or social security number and open a tab on it. one of your accounts or open a new one in your name. Checking your credit report regularly could help you find out this information as early as possible and minimize the damage.

Suppose a criminal opens a credit card in your name. If you see this account listed on your credit report and it doesn’t sound familiar to you, you’ll know you need to take action. But without checking your credit report, you might not discover this account until you start receiving default notices in the mail – by then your credit score might already have been affected.

3. To make sure you are in a good position to borrow money

You may be preparing to apply for a mortgage or other large loan for an important purpose. Checking your credit report first will help you determine if this is a good time to apply, or if it is better to clean up your credit history first and then move forward with these. plans.

Suppose your credit report shows that you have two delinquent accounts. This might cause you to delay your borrowing plans and deal with credit issues first so that they don’t prevent you from getting approved or getting a competitive interest rate.

How to check your credit report

Right now you are entitled to one free copy of your credit report every week until April 2022. But normally you can get one free copy per year from every major information bureau – Experian, Equifax and TransUnion. You can go to each office’s website and request a free copy of your report, or visit annualcreditreport.com for a copy of all three reports. It doesn’t matter how you access your credit report, as long as you make sure you do it regularly.

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We strongly believe in the Golden Rule, which is why the editorial opinions are our own and have not been previously reviewed, endorsed or endorsed by the advertisers included. The Ascent does not cover all the offers on the market. The editorial content of The Ascent is separate from the editorial content of The Motley Fool and is created by a different team of analysts. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

It takes years to build credit, but one mistake on your credit report can take your score down.

Credit scores are an important part of our life. That three-digit number can impact everything from the credit cards we qualify for to the rate we get on a mortgage. Sometimes it can even affect whether or not we get a new job or a new apartment.

But making payments on time and paying attention to how you handle credit is only part of maintaining your score. You should also be careful of errors on your report. Here is how an error caused my score to lose more than 100 points.

It started with a pop-up notification

I have worked hard to build my credit history and achieve a great credit score. One tool that I have found useful is Mint, an app that allows me to store all of my financial information in one place. No matter what stage you are at in your financial journey, the best budgeting apps can help.

I was surprised when Mint alerted me to a drop in my credit rating. I did some research and got a free copy of my credit report from each of the three major credit bureaus, Experian, Equifax, and TransUnion. I discovered that my credit score had dropped 112 points due to a new debit / collection account on my credit reports.

Collections? It couldn’t be …

I always pay my bills the moment I get them, so this was a shock. Something was definitely wrong. Aren’t collection companies known for relentlessly harassing their debtors by phone, email and any other means in an attempt to get their funds back? I had never received a single communication from someone saying I owed money.

I found the name of the collection company reporting the debt and contacted them. Without going into details, there was some confusion when I had blood tests done over a year ago. The lab had my correct name, but everything else was wrong – including my address, phone number, email, etc. So they’ve been sending me invoices and notifications for a while, but not to me.

I explained that I had lived in the same house for over five years and had the same phone number for 15 years. The doctor’s office had all of my correct information on file, so this clearly wasn’t a mistake I could be held accountable for. The collection company contacted the lab’s billing company. He agreed to withdraw the collection report as long as I paid the invoice in full.

Cover my bases with the credit bureaus

It was the first time something like this had happened to me, so I didn’t really want to leave the fate of my credit rating in the hands of a collection company. I followed the following steps:

• I have filed disputes online with each of the three credit bureaus.
• For each dispute, I had to indicate which part of my report was incorrect, explain the problem and attach documentation to support my case. I have attached copies of all my correspondence between the collection agency and the lab’s billing company, including any invoice paid in full.
• I was informed that a file had been opened and that I would receive a response within 30 days.

A few weeks later, I received the first of three responses: A bureau had found in my favor and removed the collection account from my credit report. Within a week, I had received the same response from the other two offices. All the frustration and anxiety that had built up from a small credit report error was finally starting to dissipate.

Don’t expect an overnight solution

I had assumed that my credit score would immediately be restored to its former glory. After all, the error had been removed from my three credit reports. But that was another good lesson. When it comes to credit scores, nothing happens overnight.

It took a few more weeks before the missing 112 points were restored, putting me back in excellent territory. The sad thing is that this type of situation is not unusual. Up to 1 in 5 people have errors on their credit reports. The best way to protect yourself is to check your credit report regularly. This way you can make sure that no mistakes are going against you.

Currently and through April 2022, you can get a free weekly copy of your credit report from each of the credit reporting bureaus. Many of the best credit cards also give you access to your credit score in your online account. And many personal finance apps provide this information as well. They will even notify you if your score has changed.

As I’ve learned the hard way, these types of mistakes can and do happen. But if this happens to you, there are steps you can take to address it. Do your due diligence and immediately file disputes with credit bureaus. With a little time and effort, you can permanently remove the error from your credit report.

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We strongly believe in the Golden Rule, which is why the editorial opinions are our own and have not been previously reviewed, endorsed or endorsed by the advertisers included. The Ascent does not cover all the offers on the market. The editorial content of The Ascent is separate from the editorial content of The Motley Fool and is created by a different team of analysts. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Have you ever wondered what it was like to look at your credit or loan application from across the desk?

When lenders review your credit report, “these really are common sense decisions,” says Rod Griffin, senior director of consumer education for Experian, one of the three major credit bureaus.

“Creditors and lenders find it really boring to be exciting and sexy,” he says. “Anything unusual is scary. “

When you apply for a loan or a credit card, lenders very often check your credit rating, your credit report, or both. If they don’t like what they see, you will be rejected or approved, but on less favorable terms.

And it’s not just new candidates who are being scrutinized. Credit card issuers, for example, also periodically review their customers’ records.

If you want the best deals and terms, here are seven things you and your lenders don’t want to see.

1. Late or missed payments

This one gets to the heart of what lenders really want to know: “Are you going to pay your bills?” says Francis Creighton, president and CEO of the Credit Data Industry Association, the member organization of credit bureaus.

What You May Not Realize: Anything not done on time, minimum payments are viewed by creditors and lenders as missed payments.

“What matters is that you make the payment on the due date,” Griffin explains. “If you’re only making a partial payment, in terms of the minimum payment due, that’s a bad sign. Partial payment is late payment.

When it comes to your credit score, making timely payments is the most important factor. It counts for 35% of your credit score.

2. Foreclosures and bankruptcies

These are the two worst things you can have on your credit history – and both will give future lenders a break, Griffin says.

So how could these events prompt a lender to extend credit?

“Somewhere between pretty scared and terrified,” he said. “Especially if it’s recent.

Seeing these items in your history “doesn’t mean they won’t make that loan,” says Creighton. “But they can price it differently.”

The foreclosures stay on your credit report for seven years. Chapter 7 bankruptcies (total liquidation) stay on your credit report for 10 years. Chapter 13 bankruptcies, where consumers reorganize to pay off some or all of their debts, stay in your credit history for seven years.

If you had a short sale, you won’t find those exact words on your credit report, Griffin says. Instead, it will say “settled” or “settled for less than originally agreed”.

Like foreclosures, short sales also stay in your credit history for seven years. And that’s seen by creditors as “a little better than foreclosure,” he says.

That said, the longer a foreclosure, bankruptcy, or short sale has taken place and the more financially the consumer has recovered, the less impact it will have on their credit, Griffin says.

3. High balances and maximum cards

“A high balance, relative to the credit limit on your cards, is the second most important factor in your credit score,” says Griffin.

The portion of your credit that you use is roughly 30% of your score.

And high balances or maxed out cards are “an indication of financial hardship,” he says. “Ideally, you would pay your card in full every month and keep your usage as low as possible. What we are seeing is that the people with the highest score have a higher utilization rate. [the balance divided by the credit limit], 10 percent or less.

And that goes for both individual cards and the collective total of the consumer’s credit lines and card balances, he adds.

A basic rule of credit score was to keep the utilization rate below 30%. “But 30% is the maximum, not a goal,” Griffin warns. “It’s the cliff. If you go beyond that, the scores will drop sharply. Conversely, “the more you are below 30%, the less likely you are to default,” he adds.

Point: As your usage rate changes from month to month, your score will also change.

Griffin remembers a family vacation where he put everything – travel, meals, gifts – on plastic. Its utilization rate increased by 7% and its credit rating fell by 40 points.

In January, he paid the bills for the card in full and his score returned to normal. “So don’t panic about it if your score is good,” Griffin says.

4. Someone else’s debt

When you co-sign a credit card or loan, all of the debt is written on your credit report. So as far as lenders go, you carry that debt yourself, and it will be included in your debt load when you apply for a mortgage, credit card or any other form of credit, says John Ulzheimer, a former lender of the lender. credit industry. executive and chairman of the Ulzheimer group.

If the person you co-signed for stops paying, misses payments, or pays late, this will likely be reflected on your credit report.

So if a friend or family member who needs a co-signer tells you it’s painless because you’ll never have to part with it, tell them it’s not true. Co-signing means agreeing to repay the obligation if the borrower defaults and allowing that debt, along with any late or non-payment, to count against you the next time you apply for a loan.

Co-signing for a friend or family member works well at the Thanksgiving table, says Ulzheimer, “but it doesn’t work well in the underwriting office.

5. A history of minimum payments

Creditors make money when you keep a balance, but lenders don’t like to see only minimum payments on your credit report.

“This suggests that you may be under financial stress,” says Nessa Feddis, senior vice president of the American Bankers Association. “You may be at a higher risk of default. “

Sometimes paying the minimum doesn’t signal a problem. For example, paying minimums in January, after spending vacation time, is understandable. But consistently paying minimums month after month indicates that you might be struggling to pay off the balance. Lenders who see this on a credit report may be reluctant to extend additional credit.

6. A flurry of loan requests

This won’t scare lenders so much as it causes them to reconsider what’s going on in your financial life, Griffin says.

For someone who pays all of their bills on time and has no balance, a flurry of demands could be perfectly harmless. But for someone making minimum or late payments and transferring balances, it’s a sign of financial stress and a drag on lenders.

“The inquiries suggest something to lenders,” says Creighton. “And that is valuable information.”

New credit inquiries stay on your credit report for two years and affect your credit score for one year. In the FICO scoring model, the new credit counts for 10% of the score.

“They’re the least important factor in credit scores and the last thing creditors are going to look at,” says Griffin.

Point: Certain types of credit applications (mortgages, auto loans, or student loans) are aggregated and counted as one application by the credit scoring formulas. That’s because when it comes to those big purchases, lenders know you’ll want to shop, and that’s smart.

While the new scoring formulas group similar loan applications together if done within 45 days, older versions only have a 14-day window. And you have no way of knowing which version potential lenders are using. For added security, keep all requests within 14 days.

7. Cash advance on credit card

“Cash advances, in many cases, indicate desperation,” says Ulzheimer. “Either you lost your job or you are underemployed. Nobody makes cash advances on a credit card because they want money in a bank somewhere. You usually borrow from Peter to pay Paul.

Here’s how a cash advance will send a wake-up call to lenders who review your credit report: First, the cash advance is immediately added to your debt balance, reducing your available credit and your credit score. credit for all potential lenders.

Second, large card issuers regularly reassess the behavior of their customers. They do this by pulling credit reports, FICO scores, and accounts receivable histories and running them through their own credit scoring systems, explains Ulzheimer. Many rating models penalize cash advances because they are considered risky, he says.

If the card issuer lowers your credit limit or cancels your account, it can damage your credit score and make other lenders more wary.