How to Check and Correct Your Credit Report

Nov. 15, 2010— -- A tip-top credit score is more crucial than ever in the economic times we are in, because lenders are picky, picky, picky about whom they approve and bestow the best interest rates upon.

As you probably know, your credit score is calculated by using the data in your credit report, so if that information is wrong, your score could suffer. As many as 79 percent of credit reports contain erroneous information, according to a study conducted by the U.S. Public Interest Research Group.

It sounds dreary, but correcting your credit report and improving your score is a way to save thousands upon thousands of dollars, because the higher your score, the lower the rates you will be offered on mortgages and car loans.

Fortunately, these days you have a right to see the reports that the big three credit bureaus keep on you, and to dispute errors. You can order your reports for free by going to AnnualCreditReport.com. Scan them carefully for mistakes that could be dragging down your score. Here are the types of things you should definitely dispute:

Old bankruptcies: Bankruptcies remain on your report for 10 tough years. If a bankruptcy entry is still there after that time, complain.

Debts disposed of in bankruptcy: If you declared bankruptcy in the past, debts covered by that bankruptcy settlement should not appear on your report as past due or still payable, because bankruptcy wipes the slate clean.

Outdated lawsuits and judgments: If you paid a legal judgment, it should not remain on your credit report. If you didn't pay, it will disappear after seven years.

Inaccurate tax liens: Tax liens you have paid remain on your report for seven years. Unpaid liens remain for 15 years, longer than anything else. (Guess who makes the laws.) If there's a lien on your report for longer than seven years or 15 years, dispute it.

Outdated demerits: Late payments and charge-offs in which a creditor writes off your bill because it has given up on you cannot remain on your report for more than seven years.