I understand that staying up to date on your finances can be a challenge. Fortunately, though, you have access to your own personal credit report free of charge. This can be a great way to monitor and protect your financial identity while saving you money over the long run. Yet I still find many people aren’t doing it. Read on to learn the basics on why and how you should take advantage of this opportunity.
What is a Credit Bureau?
A credit bureau is a consumer reporting agency (CRA) who collects all types of facts about how you handle your money. A credit bureau keeps track of when you applied for loans, how much you applied for and received, and how well you do at paying your bills on time.
Also, a credit bureau knows whether you’ve ever left an account unpaid and how much you owe to each of your creditors.
Credit bureaus sell your credit information to all kinds of entities for a variety of reasons. Some companies who buy your credit history will try to send you credit card applications. Some will see you’re not a good credit risk and avoid doing business with you.
What is a Credit Report?
Your credit report is a document that consists of all the information that a credit bureau compiles about your financial and bill-paying habits over time. Your credit report includes:
* Your address and where you’ve previously lived
* The creditors you currently owe: loans, charge cards, and more
* Past credit accounts
* How many times and with whom you applied for a loan
* Whether you pay your bills on time
* If you’ve filed for bankruptcy or had tax liens in the last 10 years
* Other facts about your financial and credit life
A credit report does not automatically include your FICO score.
How Can You Obtain a Copy of Your Credit Report?
It’s not difficult to get a copy of your credit report. You can go online to AnnualCreditReport.com to obtain your reports as you are allowed one credit report per year free of charge from each of the following credit bureaus:
1. Equifax. The address is, P.O. Box 740241, Atlanta, GA 30374-0241. Their phone number is: (888) 766-0008.
2. Experian. The address is, P.O. Box 2002, Allen, TX 75013. The phone number is: (888) 397 3742.
3. Trans Union. The address is, P.O. Box 2000, Chester, PA 19022. The phone number is: (800) 916-8800.
It’s not unusual to receive different information from each credit bureau. However, I typically recommend that you start with the report from one agency, and if things appear accurate, wait four months and pull the next free report from the second bureau. Again, if things appear accurate, wait another four months and pull the next free report from the third bureau. This way you are keeping a regular eye on your situation and hopefully can thwart any attempts at identity theft or mistakes that can impact your FICO score.
Two big things to look out for when pulling your report:
- Certain online groups may have “free” in their name but these are often bait and switch type of arrangements where they direct you into a paid program. Run away from any service that asks for your credit card to charge any fee now or in the future. AnnualCreditReport.com is the only online site you need to visit to access your free reports allowed by law. This gateway will take you to bureaus and keeps track of the reports you request.
- Even through the legitimate access, I have found the three credit bureaus may offer to provide you access to your FICO score if you pay a fee when accessing your basic credit report. This is not really necessary unless you plan to apply for a loan in the near future and want an idea of your score. If your credit report looks healthy, your FICO score will likely be good too.
A side note about FICO scores
Your FICO score is also known as your credit score. The magical number that determines how credit worthy you are in the eyes of a lender. The biggest issues impacting your FICO score are your on time payment history and your credit utilization rate which is the amount of credit you are using divided by the amount of credit available to you. These two factors impact over 60% of your FICO score with other items such as age of accounts and credit inquires filling in some of the difference. So the biggest things to focus on are paying on time and keeping your credit balances low. Typically, lenders do not want to see the utilization rate over 35%.The lower the better.
Along this line, when you pull your credit report, make sure lenders are reporting the correct line of credit available. I once had an experience where a bank did not report my available credit and another one reported it incorrectly so for a period of time it appeared my credit utilization rate was exceptionally high. To correct this, you can file a request online with the reporting agency to address the discrepancy. Usually it can be resolved in a month or so, some times sooner.
A final note on FICO…I have heard from folks that they didn’t want to pull their credit report because they’ve heard it will hurt their credit score. While credit reports pulled for the purpose of establishing new lines of credit or financing can impact your rating, the act of pulling your own report does not impact your FICO score.
Why Should You Obtain a Copy of Your Credit Report?
If you want to stay informed about how you’re doing financially in terms of managing loans, payments, and the like, you’ll want to use this available service. Many companies now look at your credit report before doing business with you, including potential employers, cell phone companies, and insurance providers.
The information in your credit report also determines if you can get a loan and how much interest the creditor will charge on your loan. The better your credit history, the better loan terms you can receive. Your credit report can save you, or cost you, many thousands of dollars on large loans like mortgage loans.
In the event your personal identification, credit cards, or checking account has been compromised, it’s wise to follow your credit report very closely.
In addition, credit reports often have mistakes that can cost you money or even a chance at a lucrative new job. So it’s important to keep track of the information listed in your report and if it reflects you accurately. You can have mistakes eliminated or corrected by filing a request with the reporting bureau and they will investigate.
Be Savvy with Your Financial Life
In order to stay on top of your financial life, it’s important to be familiar with credit reports. Understanding what credit bureaus do, knowing what a credit report is, understanding how to get a copy of your credit report, and knowing when and why to obtain such a report is important for having a successful financial life.
Be savvy with your financial life and stay on top of what is being reported about your. It doesn’t take much effort to pull and review a report yet it can prevent major problems and save you money in the future. Get your report today.
