If you are a in a bad financial and economic situation, there is no better time to look at your credit. Good credit can get you out of scenarios where you lack the hard money funds. Since credit is hard to obtain when lending institutions are in turmoil, you have to prepare. The first step is to look at your credit report. You must understand how it works, how it is reviewed and what each item means. By learning these very important facts, you guarantee yourself the ability to control your credit report and credit scores in the future.

Credit reports are used to make many decisions in your life. The ability to get a good job, rent an apartment, buy a home or car and even your insurance rates will be affected by your credit history.

Your credit report reflects all your financial activity. These reports contain good and bad information about you. The information is retained on the report for 7 to 10 years, depending on the type of item it is, such as a mortgage loan or credit card debt.

1. The first part of your report will list all your personal information. Verify if this information is correct. One slip of the hand on the keyboard and you can have a new middle initial. This can damage your credit report because it is interpreted as using an alias to obtain credit. Correct any mistakes with the credit agencies.
2. The next section will be a listing of any judgments or civil suits you have against your record. If someone sues you for nonpayment of a debt it will remain on your record for 7 years. Bankruptcies, Chapter 7 or Chapter 13, will remain on your report for 10 years. Verify that these accounts have not passed their removal date.
3. Next you will find any adverse accounts against your name. Here you will be able to dispute any inaccurate information. This is the most important section of your report. Any information that is incorrect must be disputed immediately.
4. Afterwards, your report will list all your accounts in good standing. This is the section that you wish to keep the most entries in.
5. Finally, the very last section of your report will be a list of anyone who has requested your credit report in an effort to issue credit. Too many inquiries can damage your score.

It is also very important to understand that these reports will contain errors. The credit bureaus are not error free and if you do not verify the information on your reports, bad items could remain on their affecting your score.

Pay Attention To Reported Credit Card Limits

One particular thing on your credit report to pay attention to is your credit card limits. These numbers are often misreported and missing. If you have any balance on your credit card, there is a chance that they will use this balance as your credit limit, thereby creating a false impression of maxing out your credit.

For example, you have a balance of $500 but your actual credit limit is $1500. In actuality, only 30% of your credit is used up. However, if the credit bureaus forget to add your limit, that $500 balance can end up being 100% of your credit. This can and will affect your credit scores.

The first step in any debt problem is to identify what you have to deal with and then make a plan with that information. Take advantage of all the knowledge you can gain about your credit report and start preparing for the rough economic events ahead. If you have not gotten a free credit report yet, then perhaps you should start to control your financial future.