Get your free credit reportThe advice from financial gurus is to check your credit report regularly to be sure there are no inaccuracies and that the only lines of credit in your name are ones that you've taken out (i.e., that your identity hasn't been stolen). Still, even if you're pretty sure nothing will be amiss, actually requesting a report is a scary proposition. Here are some facts I learned when I checked mine for the first time that can reduce the fear factor:
Access your report through the site that's actually free: annualcreditreport.com. It's a joint venture from the three credit-reporting agencies (Equifax, Experian, and Transunon), which are each required by law to provide you free access to your credit file once per calendar year. You can also call 877-322-8228, and there's even a snailmail option - but if you've worked up the nerve, why prolong the process?
Related: 7 Ways to Get a Better Credit Score
Know what kind of information you'll find on the document. The three bureaus present the info in a slightly different manner (for example, Equifax and Transunon use more graphics than Experian), but the basic content is likely to be similar. There'll be the current credit lines in your name (credit cards, student loans, mortgages, etc.) and also accounts that are closed or paid off, which may appear in your credit history for up to 10 years. Within these, you'll see the account details, including the credit limit or loan amount, the account balance, and your payment history (at least a year's worth; Equifax goes back 81 months). Next, the reports will show the credit inquiries made to your account in the past two years - both ones that you've authorized (say, if you've applied for a new credit card or a loan) and those that credit-card companies make to pre-approve you for credit cards (the latter don't affect your credit score). Finally, there may be a section listing any overdue debt reported by collection agencies, as well as any finance-based court proceedings (bankruptcy filings, foreclosures, etc.). This is the really scary stuff - but if you've been in any of these circumstances, you should know to expect it.
You can contest any info you find that's inaccurate. While spotting a mistake is disheartening, you may request that the bureau launch an investigation to (hopefully) rectify the situation. It will ask you for copies of any supporting documents you may have (canceled checks, credit card statements, and the like) that prove your case. You should also write to the creditor that posted the inaccuracy, providing copies of the same information. Most investigations are completed within 30 days, at which point you'll be given another free copy of your credit report to review (which won't count toward your annual quota).
What you won't see: Your credit score. This number - derived from a complicated mathematical equation - is considered a financial product, and not part of your legal rights. The credit bureau will offer you a chance to buy it if you so choose. You probably don't need to see it, though, unless you intend to apply for a mortgage or the like; at that point, the lending bank will run the inquiry itself. But if curiosity is killing you, go for it (just read fine print carefully, to ensure you're not buying any additional financial products you may not want, such as credit monitoring). The score will range between 300 and 850, with anything over 680 considered good to great (and over 800 is excellent), and below that dropping from OK to poor.
You can improve your credit. If seeing your financial missteps in black-and-white is what's holding you back, consider this: If you start monitoring now, you can watch for improvements as you move forward. The number one thing to keep in mind: Being late (or not paying at all) is most damaging to your credit score, so if all you can do is make the minimum payments (while not racking up more debt), you'll be on the upswing.Related: 7 Ways to Increase Savings and Improve Credit
To keep tabs on how your credit changes (or doesn't change) over time and increase the likelihood you will catch any errors, stagger your requests to the three bureaus every year. This way, you can review your credit files every four months.
What are your concerns and questions about your credit? How often do you check your credit report? Let me know in the comments.
- by Amy Roberts
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