Lenders have ordered credit reports on prospective borrowers for years. But now supercautious bankers are looking to reports from credit bureaus more than ever to screen out risky customers. The problem: credit reports are legendary for containing silly and, at times, bizarre errors. A recent report for a banker we know listed a delinquency on a Visa account he had never opened.

The best course, says Michael Manica, executive vice-president at United Bank of Michigan, in Grand Rapids, is not to take anything for granted. Even when applying for a business loan, assume that the bank will do a complete check into your personal credit. Make sure the bank offers you an opportunity to review it. To be safe, he suggests, order your own credit report (typical cost: $20) a few months before applying for a loan. "That way," he says, "you'll be able to deal with the problems without holding up the loan." Under federal law, you're entitled to rebut information that you think is false and to include short explanations in your file.

-- Bruce G. Posner

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