Thanks to a new federal law put into place in September of 2005, everyone is entitled to one free credit report each year. This is so that you can verify that your report does not contain any false information, and so you can see how your credit rates. Getting your annual free report is as easy as going to the authorized source, www.annualcreditreport.com and requesting one.

Once you have your free report, what in the world do all those abbreviations, numbers and codes mean?! The most widely used system for scoring is the FICO score, developed by The Fair Isaac Corporation, and the number determines the risk to extend credit to an individual. Credit reports are usually divided into sections; identifying information, public records, credit history, and inquiries to your credit report from creditors looking to extend you credit based on your credit score. The identifying information includes your name, address, and social security number. Make sure they are all correct. Usually this section will also include a list of your previous addresses, your date of birth, phone number, spouse’s name, employers information.

The public records section is the section you hope has no information. This is where a bankruptcy or judgment would show up on your report, and it will harm your rating more than anything else on the report, and take longer to repair. The credit history section is the most confusing. It will list every creditor you’ve ever had business with, including accounts that have been closed and those that remain open with no balances, and accounts that you are currently making payments on. Depending on which credit reporting agency you get your report from, this section will actually be displayed differently on each report.

Experian’s report displays it in “English”, and states everything in common sense terms, like “pays on time”, “pays 30 days late”, etc. Reports from other agencies might use numerical codes in a table that you have to refer to another page to find out what each code means. Either way, make sure you agree with each creditors reporting of you since this is how your score is determined. If you have accounts that you do not have the credit cards for anymore, or a loan that has been paid off but remains on your report as a revolving credit (money available to you as you pay it down), call and write each company to ask them to close the account completely and report that to the credit agencies. Otherwise, it appears that you have all of that money available to you, and that goes against your debt to income ratio.

The section called “inquiries”, and it includes a list of everyone who has ever looked at your report. This will include credit companies you have contacted to request a credit card or loan, but it will also include what is considered “soft” inquiries. Soft inquiries are any promotional offers, such as a retail store checking into your credit history to determine whether or not to mail you an offer for their credit card.

Soft inquiries do not harm your overall credit score.

You can also get a copy of a credit report any time you’ve been denied credit. This is because there is always the possibility that there are errors in your report, which prevented you from obtaining the credit you applied for. Regardless of how you get your report, take the time to look it over and find any discrepancies (immediately call the creditors in question and straighten it out) and close out any accounts that you no longer use but are showing open and available to you on your credit report. Having your report will show you where you stand if you’re considering going for a mortgage, new vehicle, or other loan.

Once your feel that you have a good understanding of your credit, it is time to apply for a loan. If you are looking for a car loan, apply for a car loan. If you are looking for a home loan, Apply for a Home Loan.

Almost EVERYONE has something they could improve on their credit.

Sure, some things are worse than others. But almost everyone has forgot to pay something and ended up with a small collection or a slow payment on their credit. The problem is usually correctable.

If you could raise your credit score, would you?

Seems like an easy question to answer, but either because of laziness or uncertainty, most people who could improve their credit rating do not. There are several things you can do (for free) to improve your credit rating:

Step 1. Get a copy of your credit report (with score). Sure, you could go to one of the government sponsored sites and get a free credit report, but you those programs do not show you your score. The score is important to benchmark your credit improvement and see what creditors see. Credit.com also offers some free credit report options that include the score. CLICK HERE TO GET YOUR FREE CREDIT REPORT WITH SCORE.

Step 2. Review your credit report looking for things that you know are inaccurate or MAY BE inaccurate. All of the credit bureaus are

required to let you dispute anything that may be inaccurate on your credit. We recommend disputing negative items on your credit IN WRITING via certified mail. The creditors reporting negative items on your credit are REQUIRED to provide proof of any negative item being reported within a short amount of time. If they do not provide proof, the item must be removed.

Some people have A LOT of bad items on their credit. If that is the case, you may decide to have a professional company repair your credit. If you do not have the time to dispute negative items on your credit, you can sign up for Credit Repair at JumpStartMyCredit.com. We also give more details about how to repair your own credit for free in our blog.

Step 3. So you have a copy of your credit report, and you have disputed all of the items you could on your credit. What’s next? Re-establishing your credit. Bad credit may be your past, but we want you to prove that good credit is your future. Many lenders want to see recent loan accounts paid as agreed to consider you for a major loan at prime interest rates. JumpStartMyCredit.com gives you the opportunity to apply for Auto Loans, Home Loans, and Unsecured Loans that can help you show a positive payment history.

Follow the steps above and you will be on your way to an improved credit rating. Keep a look out for future blog posts at JumpStartMyCredit.com.