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How to Select the Right Credit Reports Product

Here's the problem.

You're looking to take out a new home or auto loan, but afraid that a history of bad credit will hold you hostage to high interest rates.

You've got good reason to be concerned. Lousy credit scores can cost thousands of dollars in higher interest rates on loans for cars, homes, and small business operations. Credit scores range from 300 to a perfect 850, and are tied to financial data that your creditors report to the three major credit reporting agencies: Equifax, TransUnion and Experian. Key credit data typically includes your debt payment history, the length of your credit history, the different types of credit you've accumulated, any outstanding debt balances and recent applications for credit. Quite simply, the higher your credit score, the more money you can save from creditors. Take control of your credit by choosing the optimum credit reporting tool – one that will not only keep you apprised of your credit scores, but can also alert you to sudden changes in your credit reports – bad or good.

A good credit report service can help you determine the following issues:

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  • Areas in your credit report that need improvement
  • Which items in your credit reports are hurting your scores
  • If there are errors in your report and how to dispute and get them corrected
  • How much credit a supplier will offer you
  • What interest rates you will pay
  • How much money creditors will loan you
  • How your customers view you
  • What your insurance premiums will be
  • The level of potential investor interest, if you run a small business

Start your search by getting the facts - One good place to begin is to request a free credit report to find out what's being reported in your credit report and make sure the information is accurate. (You can request a free report once a year from all three bureaus at: www.annualcreditreport.com,) Once you've established that the information in your reports are accurate, it's time to find out what your credit scores are saying about you. By and large, if your credit score is above 720 you'll qualify for the best interest rates and credit terms. Anything under the "720" level tends to be the demarcation line for most creditors – any number below it and you'll be stuck with higher interest rates, and if you're in the <600 range, you may even be rejected for a loan.

Make sure to shop around - When it comes time to look for a credit reporting service, all things are not equal. Shop from a reputable site that you can trust. Pay close attention to any recurring monthly fees – which average anywhere from $14.95 to $79.95 – so make sure you get you're getting your money's worth.

Get the details – Make sure you read the fine print on each offer. If you're looking for a complete picture of your credit standing, make sure you choose a service that provides credit reports for all three of the major credit reporting agencies (Equifax, Experian, TransUnion). Information from bureau to bureau can vary. This is because some lenders choose to report to only one bureau, while others will report to all three. Also pay attention to the scores that are provided. There are many different consumer scores on the market, which are all great tools for getting a general idea of where you stand – but if you're applying for a loan, you should look for a service that offers a score that lenders will use. Some services, like Identity Guard, offer 24/7 monitoring that will update you whenever a change occurs in your credit reports.

One last tip. Watch out for credit reporting web sites that offer credit-monitoring products or services for a fat upfront fee. Such sites may be run by fraudsters to hijack your personal information.

No matter what your score, there are concrete steps you can take to upgrade your credit standing. Bad credit doesn't have to be a life sentence – a good credit reporting service can help you pinpoint areas in your file that need work and even help you follow your road to improvement with updates when your scores increase or negative items fall off your reports.