Despite the fact that an individuals credit report is something that can effect their ability to obtain financing, many are unaware of just what a credit report is. Even more common is the fact that most individuals have never checked the information on their credit report and have no clue what it is saying about them.

Your credit report is a historical record of the manner in which you have handled credit. It is composed of your personal identifiable information, such as name, social insurance number, and your current and past addresses, employment, etc.

More importantly, your credit report lists all credit cards, regardless if they have been closed, and the history attached to their use. It lists all loans, mortgages, and financing you have received along with your credit behavior in regards to that financing.

While typically the information on your credit report spans a period of seven years, public record information such as unpaid child support, tax liens and bankruptcy claims can remain on your credit report for as long as 10 to 15 years.

So why is this important to you? It is important because the credit report is what financial institutions will use to decide whether or not you are a good risk to receive credit from them. The credit report will show them if you have a history of defaulting on payments, making late payments or if you have maintained a good track record of meeting your payments consistently and on time. In addition, it will help determine the interest rates you will be charged if you do receive credit. Those with a poor record may be penalized with higher rates to mitigate the lenders risk.

Ok, so now we know why our credit report is important, but what do you as an individual have to say about it?

Your credit report is compiled by three main credit bureaus. They are TransUnion, Experian, and Equifax. These companies receive information from your various creditors and from public records. They then use that information to compile your credit report. When a financial institution requests a copy of your credit report, they are charged a fee and they make money.

But what if the information they have received is incorrect? Unless you have checked what your credit report is saying, you dont know if the information listed is correct. It is recommended that you check the accuracy of your credit report every six months to a year. If you are planning a major purchase, such as a buying a house, you will save yourself problems obtaining your mortgage by checking your credit report at least a year in advance and using the time in-between to clear up any inaccuracies.

www.annualcreditreport.com is a central web site that allows you to put in a request for a free copy of your credit report, once every 12 months, from each of the three main credit bureaus.

Another service you may consider using is a credit report monitoring service such as

In conclusion, everyone who has used credit has a credit report. Credit reports can contain errors that can result in your being denied credit or paying higher fees to obtain credit. Now that you know what a credit report is, check yours out and ensure it is delivering accurate information to your creditors.

Warmest regards,

SherryD

When using a home budget to reduce debt, you are given an overview of where your money comes from, and more importantly, where it goes. That is why there are so many more columns for expenses than there are for income. The fact is, until you know where the money is going, you have no real means of identifying spending habits.

Using a home budget to reduce debt helps you identify your spending habits, which then allows you to develop a game plan on how to make changes to those habits and identify areas where expenses and debt can be reduced. There is nothing better than an in your face, black and white (or in this case red) list of expenditures in your home budget to awaken you to those areas.

Many jump straight in with a software program instead of a paper or spreadsheet version. Since software versions require your calling up a report of some sort to view expenses it is not as in your face as you want this to be in the beginning and reduces the effectiveness of using a home budget to reduce debt.

For those of you that are a bit computer savvy, a simple spreadsheet program will do. If you do not have a spreadsheet program, try out the one available at www.openoffice.org. This program is free to download unlike its Microsoft equivalent.

A spreadsheet program is an electronic version of a columnar ledger book with a lot more options and functionality. If you are the old fashioned type, visit your local business supply center and pick up the paper version. It should have at least 20 columns across. While that sounds like a lot, it wont take you long to use them all and possibly need more. This is one of the benefits of using software, as the number of columns and rows that can be used is limitless.

In the beginning, you will want to use a lot of columns, particularly in the expense area, to better define where the money is going. Lumping it all under miscellaneous is not going to help you. Using a home budget to reduce debt means detailing where the money is going, the more detailed the better.

Now comes the fun part. Beginning on the first of the month, collect every receipt for any purchase made, even if it is a pack of gum. An easy way to store those receipts so they are not misplaced is to label an envelope and put the receipts into the envelope at the end of each day. In the beginning, while you are getting comfortable with your income/expense situation, you may want to set aside a few minutes each day before filing those receipts to enter them into your home budget page for the month. This will help you develop the expense columns that reflect your spending situation. It also makes using a home budget to reduce debt a daily practice where your debt reduction goal is prioritized.

As complicated, as it may seem, this process becomes relatively simple as you begin to use it. If you are unsure how to set up the page, please download my bonus add-on, Formatting Your Home Budget Page. In the meantime, dont forget to keep collecting those receipts, as they are key to using a home budget to reduce debt.

Warmest regards,

SherryD