Learn to understand your credit

Jobs and mortgages can depend on credit history, but most people don’t regularly check their credit report.

The problem: Many times these reports are prone to mistakes, says Tim Powers, a credit expert for Consumer Credit Counseling Services in La Crosse, a nonprofit that advises people on credit issues.

A federal consumer protection agency recently announced it will begin double checking the work of credit reporting agencies to make sure the reports are accurate.

Still, people should keep regular tabs on their own report to bolster the defense against errors or fraud, Powers said.

“I think people need to know where they’re at,” Powers said. “What they have out there as far as their obligations go.”

In a financial literacy survey, 62 percent of respondents indicated they hadn’t ordered a credit report in the past year, according to the National Foundation for Credit Counseling.

Credit reports break down demographic information, court records and credit information, including outstanding debts and payment status.

Mistakes can have a real effect on a person’s credit score, used as a yardstick by potential lenders.

Sometimes a name is misspelled, sometimes the birthday is wrong, but such mistakes can still harm a credit rating, Powers said.

Less frequently, reports have outdated or false credit information. They can show a loan as outstanding, even if it’s already been repaid. They can also mix up people with the same name, tacking on loans to the wrong person’s report.

Sometimes, they show signs of identity theft and fraud.

Powers guesses there’s more than one reason why so few people check their credit reports. Both fear and ignorance could be to blame, he said.

Some people might be too embarrassed about their debt load. Others might not be aware of the resource, or how to read a report.

However, any curious borrower could and should peek at their report, and checking once a year is free, Powers said.

More people are coming to him and his agency to find or decipher their credit report Powers said.

“It’s important that people really know what’s contained in there,” he said. “We as consumers have a right to get a free credit report.”

How to Improve your Credit

–Always pay debts on time.

–Pay the entire balance if you can, if not, try to pay more than the monthly minimum to eat away at the principal.

–Stay under half of your limit (if you have a $2,000 limit on your credit card, use only up to $1,000).

–Be patient and consistent — a solid credit score comes from an established history.