The mention of 'credit report' sends chills down the spine of people who haven't been responsible as far as managing their financials are concerned. For these people a credit report is exactly what they need to begin with. Lenders often look at these reports when you are looking for a new loan or even opening up a credit card account. This will give them an idea of how much risk is involved in lending you money.

In the United States these reports are maintained by three major reporting agencies:

1) Experian: PO Box 2002, Allen TX 75013, www.experian.com

2) Equifax: PO Box 740241, Atlanta, GA 30374; www.equifax.com

3) TransUnion: PO Box 2000, Chester, PA 19022; www.transunion.com

These reports list your financial history including credit cards, home loans, car loans and any other debt you have. The key facts that are recorded are whether you made any late payments, how many times you were late, whether they were 30-days past the due date, 60-days or more. These reports also contain your phone number, social security, current and old addresses.

This information is available to qualified lenders - mortgage lenders, banks, credit card issuing companies and other entities if they required during legal proceedings etc. This can be a scary proposition considering that these reports might have erroneous information.

These sometimes list inactive loans, show credit accounts that are open even though they are cancelled and others. At times, they don't list payments that have been made to overdue amounts or other debts that have been paid off. These discrepancies exist even though these companies do their best to maintain up-to-date information.

This is exactly why it is your responsibility to review these reports thoroughly. Request copies from the 3 agencies mentioned above, note any errors, find proof via documentation and send these documents along to the agencies to fix the entries.

Fortunately due to a recent law being passed, you can obtain one copy free of charge from the credit reporting agencies. You will find several websites which will let you do this. One such website is annualcreditreport.com.

If you are struggling under a mountain of debt, your first step to become debt-free is to get your credit report. Getting to know your past spending habits is the best way to start working on that plan.

After having a look at your history, notice any debts that are overdue. These should be cleared up as fast as you can. Often the recommended approach is to pay off the smallest amounts first. The psychology behind this is that you will get more satisfaction from these mini-successes and this momentum will help you build confidence of working towards the bigger goal of being totally debt-free.