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Tips to Understanding Your Credit Report, and Fixing Errors You May Find

Following are six of the key items that appear on a credit report, with tips on how to fix any errors you may find.

Investors corner icon1. Personal information. Is your name, Social Security number, address and other personal information accurate? If not, contact the credit reporting agency about the error. A lending company would be skeptical of making a loan to someone whose name and address (as listed in the credit report) are not consistent with the information provided to assess the loan.

2. Open account information. The report will detail all of your open credit card accounts, highlighting your credit limits, whether you have been paying your bills on time and if there are any balances on the account. You should pay particular attention to the accuracy of this information because lenders use it to decide whether they’ll make a loan. Inaccuracies in this section are a major reason why many loans are rejected.

3. Mortgage information. Credit reports also detail information on any mortgages you may have outstanding, any late payments, and the account number of the loan and the date of mortgage origination. The same information is available for any other loans that you may have outstanding, including personal loans, home-equity loans, credit lines and other financing originated by a financial institution. It is absolutely essential that this information be correct. If a lender feels you have too much debt (even if the information is incorrect) the lender won’t approve you for another loan.

4. Collections/negative account histories. Credit reports will identify whether you have any accounts that are in collection and what the status of those cases is. Because this information can adversely impact your overall credit score and affect whether you are able to obtain a loan, it is important that it is correct. Credit reporting agencies often offer services that will help you resolve these issues or provide you with general advice and strategies on how to improve your credit score.

5. Judgments/liens. If there is a judgment or an award against you in a court of law (stemming from a personal suit, small claims matter, etc.) those terms will be included on the report. Should an individual or some other entity have a lien on your property, that information will also be made available. Specifically, the case number, the court where the lien was established, the amount of the lien and its resolution (whether the lien has been released) will also be detailed.

6. Bankruptcies. Bankruptcy information is also available and should be checked, as well. Specifically, the report will outline whether it is an individual or a joint bankruptcy (with, for example, a spouse). It will also include the amount of assets you have and the liabilities you have incurred.

Correcting erroneous information
There is a space at the bottom of each section of the credit report where you may add your personal comments. For example, in a lien situation, you might say that the lien was established due to a misunderstanding with a vendor (and/or that it was promptly satisfied).

The space may be used to outline other discrepancies as well. You may also choose to briefly explain why you are behind on a certain debt payment.

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Try to obtain your credit report at least once a year and review it for any inaccuracies. If you spot any errors, have them fixed as soon as possible.

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This material was prepared by LPL Financial, LLC, and is for educational and informational purposes only. It is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. Tower Federal Credit Union and Tower Wealth Management are not registered as a broker-dealer or investment advisor. Registered representatives of LPL offer products and services using Tower Wealth Management, and may also be employees of Tower Federal Credit Union. These products and services are being offered through LPL or its affiliates, which are separate entities from, and not affiliates of, Tower Federal Credit Union or Tower Wealth Management. Securities and insurance offered through LPL or its affiliates are:

Not Insured by NCUA or Any Other Government Agency Not Credit Union Guaranteed Not Credit Union Deposits or Obligations May Lose Value

Your Credit Union (“Financial Institution”) provides referrals to financial professionals of LPL Financial LLC (“LPL”) pursuant to an agreement that allows LPL to pay the Financial Institution for these referrals. This creates an incentive for the Financial Institution to make these referrals, resulting in a conflict of interest. The Financial Institution is not a current client of LPL for brokerage or advisory services.
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