Sifting Through Your Own Credit Dirt

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Credit bureaus track your financial moves closely. They are in business to find the financial dirt many living on the edge of credit worthiness would rather keep buried. Better credit has a financial value and companies are not likely to take your word for it. But since mistakes are made, you have a stake in reviewing your credit report for inaccuracies or strange activities that could mean you have been the victim of identity theft.

The Fair Credit Reporting Act (FCRA) and the Fair and Accurate Transfers Act (FACT) now entitles you to review your credit records once a year for no charge. You may request your annual credit report from each of the three credit reporting agencies, TransUnion, Experian, and Equifax.

To request your credit reports, visit the central source online at or call 1-877-FACT-ACT. We suggest staggering your credit checks throughout the year. If you and your spouse each request a copy of your credit separately, you can check one of your reports every two months.

Five factors are considered when calculating your overall credit worthiness: your previous credit history, your current level of indebtedness, the length of time your credit has been in use, the types of credit you have, and your pursuit of new credit. A mathematical model determines your credit score, based on these factors.

Your free credit report will not include a copy of your credit score. To see your score, you will need to pay the credit bureau. Unless there is an over-riding cause, save your money. You can learn everything you need to know about your credit by a careful review of the free portion of your report.

Check each part of your credit report carefully to ensure its accuracy. The reporting agencies do not all have the same information. But what they collect falls into four main categories: personal information, account information, inquiries, and alerts.

Part one lists your personal information. You should see your social security number, date of birth, current and previous addresses and employment history. Your age, gender, ethnicity, and location do not affect your credit in anyway.

Part two catalogues all of your account information. Your accounts are likely divided up into accounts in good standing and those which are past due. For each account listed, you will see your account number, contact information for the lender and the type of account-whether the account is a mortgage, revolving (credit card), or an installment account. The date the account was opened, the payment history, current payment status, account balance, and credit limit will also be listed.

Closed accounts will continue to appear on your report. Check the status of the accounts you requested to be closed. Next, for open accounts, look at the account activity section. Do your balances match your records? Do you have any accounts you thought closed but remain open? What about the payment history?

Part three lists all of the inquiries into the status of your credit. Inquiries into your credit history may negatively impact your credit score. “Hard” inquiries are those you initiate by filling out a credit card application or by authorizing an employer to see your credit history. Hard inquiries can negatively affect your credit if it appears you are quickly expanding your credit beyond your means. “Soft” inquiries are those made by companies for solicitation purposes or from current lenders checking on the ongoing credit health. Soft inquiries do not affect your credit.

Part four may be called “alerts” or “potentially negative items.” This part of your report can wreck your credit score. If you have been turned over to a collection agency or if you have any public records such as bankruptcy, tax liens, foreclosures, lawsuits, or garnished wages on file, these will be listed in this section.

Under FCRA rules, you may dispute the inaccuracy with the credit reporting agency, and the credit reporting agency must investigate the dispute and respond to you within 30 days. Information which is incomplete, incorrect, or unverifiable must be removed from your credit history within 30 days. Agencies may not report negative information which is older than seven years, or ten years for bankruptcy. For more information on dispute procedure, visit

Photo by Oliur on Unsplash

Go to part:
  1. Credit Part 1 – Learn What Credit Stalkers Know About You
  2. Credit Part 2 –  Sifting Through Your Own Credit Dirt
  3. Credit Part 3 –  Eight Steps to Fix Your Broken Credit
Follow David John Marotta:

President, CFP®, AIF®, AAMS®

David John Marotta is the Founder and President of Marotta Wealth Management. He played for the State Department chess team at age 11, graduated from Stanford, taught Computer and Information Science, and still loves math and strategy games. In addition to his financial writing, David is a co-author of The Haunting of Bob Cratchit.