Your Credit Report actually determines if you can qualify for a new loan or a credit card at moderate interest rate. Your credit report presents your financial story to whoever obtains it. Lenders, employers, insurers, etc. read your story and then decide whether or not to work with you. You can't change your credit report completely. However, you can definitely add a 100-word personal note on it.
As per the Fair Credit Reporting Act, if there's anything wrong on your credit report, then you can explain or dispute the mistake by inserting a 100-word personal statement on it. If you've been a victim of identity-theft, then you can also explain the same to the creditors.
Credit reporting agencies such as Experian and TransUnion give you the option to add numerous statements on your credit report. However, Equifax allows you to only add one statement at a time.
How a 100-word statement helps you
Regardless of the fact that you can use only 100 words in your statement, a personal note on your credit report can prove to be immensely beneficial. You can narrate your version of the story to creditors. This gives you a sense of power.
You feel satisfied after putting across your side of the story to creditors. For instance: If health issues compelled you to make late payments, then a personal note on your credit report can help to highlight the issue and convey the message to creditors. They can know that you haven't made late payments intentionally.
There are creditors who make decisions largely on the basis of credit score. However, there are several creditors who prefer to gauge your credit worthiness in the traditional way. They always try to look beyond your credit score and give importance to issues that may need extra explanations and documents.
A personal note may help you appear concerned about your current credit situation. Creditors will be pleased to know that you're not someone who is irresponsible or least interested to rectify a mistake. You're deeply concerned about your credit report and score. You wish to do just the right thing.
A personal statement may scare away the collection agencies. The statement will prove that you're an educated consumer. You're fully aware of your rights and it won't be easy to collect money from you.
According to Elk Grove, a consumer law attorney, "Debt collectors know that a consumer who is educated is going to fight them and make them prove everything; they can't collect money as easily from people asserting their rightsâ.
When you should write a personal statement
You can pen down a personal statement whenever it is deemed necessary. For instance: a fake credit card account has been reported on your credit report. You've reported the credit card company and local authorities about this. You have even imposed a fraud alert on your credit report. However, creditors may want to know more. You can quench their thirst by giving a small description of the situation.
If you feel that your credit is suffering without your fault, then narrating the entire situation may prove to be beneficial for you. However, in case you've some suspicions, then it is better to keep mum.