Your credit report (or credit history) is a snapshot of your financial health.
It contains information about how much money you have borrowed over the years from credit card companies, from banks or from stores, as well as how responsibly you paid that money back.
Any time you are late with a repayment, that information is recorded in your files, and points are taken off your credit score (or rating) according to whether your repayment was 30, 60 or 90 days past due, or whether it was repaid at all.
Credit reports are important because they determine your ability to continue borrowing money from credit card companies and banks.
But potential lenders are not the only people who use them as a way to predict trustworthiness.
Increasingly landlords and employers have begun using credit reports to help them determine who to rent to or who to employ.
So bad information on it can have a tremendous impact on your life.
What kinds of credit report information are "negative" information? Outstanding credit card debts that are not being repaid in a timely fashion.
Foreclosures.
Repossessions.
Tax liens.
Chapter 13 bankruptcies (personal bankruptcies) remain on your record for seven years; Chapter 7 bankruptcies (liquidation) remain for ten.
Increasingly often, however, inaccuracies are appearing on credit reports, particularly with the proliferation of identity theft.
Correcting credit history errors can be a daunting process for the individual involved.
The first step is to obtain copies of your credit history from the three major credit report companies, or credit bureaus, Equifax, TransUnion, and Experian.
Now, sit down and organize your debts by date - as far back as the credit bureaus are tracking you.
For the moment forget about the older debts - if you're in a position to do so, it's a better idea to pay newer debts first and to focus on paying the larger debts.
If you can deal with the newer debts effectively, this will balance any negative information that may be associated with older debts with positive credit information.
Is there disputed information on your credit history? Contact your creditors by phone to point out the error before you write a formal letter of complaint to the credit card company or other lender; often the dispute can be resolved through these means.
If you do need to proceed with a formal complaint, be sure you have copies of relevant documents like receipts, photocopies of contracts, agreements, or other paperwork attached to the letter you send requesting an investigation.
Be persistent: it can be frustrating and time-consuming to get rid of bad information from your credit report, but it is always worth the effort.