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Here's how to understand your credit report

Since credit reports are the backbone of the credit score, it is important to fully understand what a credit report is, what consumer protections are in place and what actions can be taken if errors are found.

Education is key, according to Gail Cunningham, spokesperson for the National Foundation for Credit Counseling. If an error is found, it's the consumer's responsibility to take immediate action.

Financial counselors at The Village Family Service Center offer the following Dos and Don'ts to help consumers better understand credit reports and the dispute process.

Do understand the purpose of a credit report. A credit report is a track record that reflects an individual's borrowing history. It also contains information about places of residency, law suits, arrests, and bankruptcies. The information contained in the report may impact loan approval, the rate at which money will need to be repaid, insurance eligibility, housing decisions, and employment.

Do review the credit report for accuracy. Check the report for errors, confirming that all information is correct.

Do review the report often. Frequently reviewing the report allows action to be taken promptly if a problem is found or if identity theft is suspected.

Do understand your rights. The federal Fair Credit Reporting Act (FCRA) provides consumers with protections around the accuracy and privacy of information in their credit file. The FCRA holds both the credit reporting company and the entity that provided the information to the bureau responsible for investigating and acting upon the dispute.

Do expect a timely response. The FCRA requires credit reporting companies to investigate the items in question, usually within 30 to 45 days of the dispute being filed.

Don't think that all errors have an equal impact. Some mistakes on reports are not material, but others can have a negative impact on the credit score, such as information that does not belong to you or account inaccuracies.

Do add a statement explaining the circumstances. If an entry is disputed but the consumer disagrees with the results of the investigation, he or she is allowed to add a 100 word or fewer Statement of Dispute to be included with each future credit report, as well as to those who received a copy of the report in the recent past if requested.

Don't expect negative information to be removed. If information is negative, but true, it needs to remain on the report.

Don't use a credit repair company offering a quick fix. There is little a credit repair business can do for you that you can't do for yourself and for free. The credit repair companies may charge consumers high fees and deliver few, if any, results.

For help reviewing a credit report, contact The Village Family Service Center at 1-800-450-4019 or www.helpwith