Credit is more than just a plastic card you use to buy things: it is your financial trustworthiness. Good credit means that your history of payments, employment and salary make you a good candidate for a loan– whether it’s for a house, a car or even just for obtaining a credit card. Having good credit usually translates into lower payments because you’ll qualify for lower interest rates. Bad credit, however, can be a big problem. It usually results from making payments late or borrowing too much money. However, sometimes it results from simple mistakes on your credit report. Consequently, periodically checking your credit report is something we should all do because to not do so could end up costing you thousands of dollars in higher interest rates in the future.
Although much has been done to clean up the problems once associated with credit reports, it is still not unusual for a credit report to contain errors. A rather common mistake involves people with the same name having credit information appear on the wrong person’s account.
Another reason it’s important to stay on top of your credit report is that a credit report is often the very first indicator that you are an identity theft victim: something you will want to uncover and halt as quickly as possible.
Since it can take months to correct even a simple mistake, everyone should check their reports annually. That one small mistake could keep you from getting a loan, or from getting the best interest rate your good credit would normally allow.
So–where do you start? It’s easy and simple. Start by obtaining a free credit report from each of the three major credit bureaus. The Fair Credit Reporting Act (FCRA) requires each of the nationwide credit reporting companies–Equifax, Experian and TransUnion–to provide you with a free copy of your credit report, at your request, once every 12 months. Many financial experts feel it is best to request a credit report on a rotating basis from a different agency every four months. In this way, you have the opportunity to stay on top of your report and catch any errors more quickly, rather than requesting a free report from all three agencies at the same time.
The three nationwide credit reporting companies have set up a central website, a toll-free telephone number and a mailing address through which you can order your free annual report.
To order, visit www.annualcreditreport.com, or call 1-877-322-8228. You can also complete the Annual Credit Report Request Form (found on the website) and mail it in. Do not contact the three nationwide credit reporting companies individually, as these firms are providing free annual credit reports only through www.annualcreditreport.com, 1-877-322-8228 or mailing to the Annual Credit Report Request Service.
Only this one website is authorized by the government to fill orders for the free annual credit report you are entitled to under law. Other websites that claim to offer free credit reports, credit scores and credit monitoring are not part of the legally mandated free annual credit report program. In most cases, the “free” product comes with strings attached. For example, some sites sign you up for a supposedly “free” service that converts to one you have to pay for after a trial period. If you forget to cancel before the trial period ends, you’ll end up paying for a service you don’t want.