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""The first part of our credit series showed how understanding credit can help you build a positive credit history. Now it’s time to talk about credit management. The Office of Consumer Affairs and Business Regulation (OCABR) and the Attorney General’s Office (AGO) offer guidance on checking your credit report, building credit history, and improving your credit.

Checking Your Credit Report

Credit reports are prepared by reporting companies that collect information about your access to and use of credit, according to the Federal Deposit Insurance Corporation (FDIC). Creditors use them to decide how reliable you are and whether or not to give you a loan. Employers, landlords, and insurance companies use your report to determine whether or not you’re likely to make timely payments.

Checking your report is important because it allows you to keep an eye on your credit habits and dispute any mistakes filed about you by creditors.

  • Ordering a Free Annual Credit Report — You are entitled to one free credit report every calendar year from each of the three national consumer reporting companies. Checking your credit report several times a year is a good way of getting a comprehensive look at your yearly credit habits. For example, you may want to order one from a different company once every four months. Watch out for scam sites when ordering your free reports, as there is only one official annual credit report website.
  • Obtaining a Copy After Being Denied Credit —Under Massachusetts General Law Chapter 93 Section 56b, you are entitled to a free copy of your credit report within 60 days of being denied credit. If a creditor denies your request, according to Massachusetts General Law Chapter 93 Section 62, they must give you a notice of adverse action, which tells you the reasons why you were denied and includes information on which credit reporting company provided the report that resulted in your credit denial. You may then request your free copy from that particular agency in order to check for any incorrect information.
  • Correcting Information — If you find inaccurate information on your credit report, such as an incorrect payment status or information like a Social Security number that isn’t yours, contact the credit reporting company to correct the error. The reporting company must investigate your claim within 30 business days by asking the creditor in question to review its records for any discrepancies, unless the company believes that the dispute is “frivolous or irrelevant” as defined by Massachusetts General Laws Chapter 93, Sections 58a and b.

Building Credit

When you build positive credit history, you are boosting creditors’ confidence in your ability to repay money you’ve borrowed, according to This improves your chances of getting approved by creditors to make large purchases on credit, such as buying a house or car. Some ways you can build credit include:

  • Service & Installment Payments — Paying your bills on time for services like phones, Internet, cable, or other utilities like gas, water, and electricity helps build credit because it shows creditors that you are able to adhere to a payment schedule. Paying installment payments like car loans, student loans, and rent in a timely manner is also important. While service and installment payments don’t appear on your credit history, they can be used as supplemental information by creditors. If you have entered debt collection for payments like these, it will appear on your credit report.
  • Low Credit-Limit Cards or Loans — Obtaining a credit card or consolidated loan with a low credit limit from a local bank, such as a secured credit card, and paying it off on time can help you build credit. Ask the bank if it sends information on your account to a credit reporting company to make sure that you benefit from this option.
  • Credit Cards — Paying your credit card bill on time helps you build credit. Understand your credit card costs and the fine print of your contract terms and conditions so you can avoid penalties and ensure a positive transaction history. Having low balances and a longer credit history also improve your credit.

Improving Credit & Avoiding Credit Problems

If you are looking to improve your current credit, here are some approaches to consider:

  • Better Budgeting — The simplest way to improve your credit is to improve the way you budget. Understanding and managing your spending can help you redistribute your money, identify financial priorities, and make sure all your payments are on time.
  • Contacting Creditors — Reaching out to creditors is a good way to establish trust if you are having difficulty making payments, or if you anticipate problems with your upcoming payments. Many creditors are willing to work out a more manageable payment plan with you.
  • Credit Counseling Services — If you are struggling to improve your credit on your own, you may want to consider a credit counseling service. While such services may be beneficial, it is crucial that you determine the costs and benefits of counseling before choosing to pursue this option.

Managing credit effectively can help you get the most value out of your lines of credit. Keep the points above in mind as you navigate your credit accounts and build a positive credit history.

Comment below or tweet @MassGov with your questions on credit management.

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