If you carry accounts with creditors that report your debts to the credit bureaus, you have a credit report. Your credit report serves as record of your financial history for lenders and other financial institutions. The information within your report determines your credit score -- the higher your score, the less risk you present to lenders and the more money you will save in interest on loans and credit cards. It is crucial that all consumers take steps to protect themselves from misinformation on their credit reports that could ultimately damage their credit scores.
Reporting Period Limitations
The Fair Credit Reporting Act (FCRA) establishes a reporting period for your debts and accounts. The reporting period differs for each item within your report. Positive closed accounts, for example, can remain for seven to 10 years, depending on the creditor. Negative notations, however, such as collection accounts, foreclosures, repossessions and missed payments only appear for seven years.
Negative information is always derogatory for your credit score. If you come across derogatory accounts on your credit file after the reporting period for those accounts expires, you can protect your credit rating by notifying the credit bureaus of the error and requesting that they remove obsolete entries.
Identity Theft Prevention
Incidents of identity theft often result in numerous derogatory entries on a victim's credit report without his knowledge. The Fair and Accurate Credit Transactions Act, an amendment to the FCRA, provides you with the right to place a fraud alert on your credit report that helps protect you from identity theft and preserve your good credit rating.
When you place a fraud alert on your credit reports, any lender accessing your files receives notice not to extend credit in your name without first calling you and verifying that you did, in fact, apply for new credit. Fraud alerts only last for 90 days, but you can renew them repeatedly with each credit bureau.
Disputing Information
Inaccurate information on your credit report can damage your credit score and cause you problems when you apply for new credit and loans. The FCRA gives you the right to pull one free credit report each year to check for creditor errors. Should you find an error, you have the right to formally dispute the error with the credit bureaus. Each credit bureau will then initiate an investigation into your claim. If the credit bureaus determine that the information you disputed is inaccurate, they will remove it from your credit report.
Smart Financial Behavior
Knowing how to boost and maintain a positive credit score helps you protect your credit from blemishes that occur due to your own behavior. Paying creditors on time, for example, helps you avoid a damaging missed payment notation within your report that lowers your credit rating. Keeping a low balance on your credit cards and paying debts in full, rather than settling them for less, also prevents credit damage.
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