Read on to learn how to get a free credit report and four other things about your credit report and credit score. Share this information with your children or siblings who may have these same questions.
#1 – Why are my credit report and credit score important to me?
Your credit report is like a story of your finances that follows you for life. Any time you make a purchase using credit lenders will rely heavily on your credit report to determine if they will lend you money, and if they do, at what interest rate. A good, clean credit report can save you thousands of dollars in interest over the life of your home and auto loans. A credit history marked by late payments and inaccurate information can cost you that dream car or home in the future. Keep in mind that your individual credit report can also affect your spouse’s record so maintaining a good credit history can be critical in maintaining a happy marriage.
#2 – What information is found in a credit report?
- Personal information – name, spouse’s name, address history for the past 5-10 years, date of birth, Social Security number, phone number and current and previous employers
- Tradeline – a list of your credit accounts, the opening and closing date (if applicable), if payments are made timely or late, the balance, joint account information and any negative information
- Public record – information such as monetary judgments, state and federal tax liens, and bankruptcies
- Inquiries – by everyone who has viewed your credit report. This includes employers, retailers, landlords, insurance companies, promotional (i.e. pre-approved credit offers) and lenders reviewing customer reports.
#3 – What is my credit score?
You are assigned a three digit credit score which lenders use to quickly evaluate a potential borrower’s creditworthiness. This score fluctuates throughout your life based on several factors – outstanding account balances, number of open accounts, payment history, and frequency of credit requests and inquiries. Credit scores typically range from 300 to 850, though this scale can vary depending on who developed the credit score model. Generally, a credit score of 720 is considered “good,” and will get you the best rates available on loans and credit cards. However, it’s important to remember that lenders can have different standards for what they consider to be a good credit score.
#4 – What’s the process to get a free credit report and how often should I obtain one?
It’s recommended to obtain a copy of your credit report annually. Your credit report can be obtained at no cost by visiting annualcreditreport.com. The most secure way to enter this website is by typing in the web address directly. It’s best to not follow any links from other websites. You are entitled to receive one free credit report every 12 months from each of the 3 nationwide consumer credit reporting companies – Equifax, Experian and TransUnion. You can order all three reports at one time or space the requests out during the year. The advantage to spacing out the requests is that you can keep track of any changes occurring during the year. On the other hand, ordering all three reports at once allows you to compare the reports. Whether you decide to order all three at the same time or space out the requests, set up a reminder on your calendar so you can stay current with your credit activity. Note that you can obtain your credit reports for free but there is a nominal fee to obtain your FICO score (credit score).
#5 – What are the steps to take if I find a mistake on my credit report?
Your credit report and credit score are valuable assets so it’s worth the effort involved to fix any problems. If you spot inaccurate or suspicious information on your report, take these steps:
- Write a letter to each credit reporting bureau, giving your full name and mailing address, date of birth, and Social Security number. Provide an explanation of the information that is inaccurate.
- Request a deletion or correction.
- Clearly identify each items that you dispute.
- Sign your letter by hand.
- Enclose a copy of your credit report with the items in question circled.
- Include copies (not originals) of documents that support your position.
- Send your letter by certified mail, return receipt requested, so you can prove that the credit bureau received the information.
- Keep a log of your efforts and everyone you talk with.
Here is the contact information for all three credit reporting bureaus:
Equifax – P.O. Box 740241, Atlanta, GA 30374 800-685-1111, equifax.com
Experian – P.O. Box 9595, Allen, TX 75013, 888-397-3742, experian.com
TransUnion – P.O. Box 2000, Chester, PA 19022, 800-916-8800, transunion.com
Order your free credit report and get started understanding and monitoring your credit now! Would you like Direction Financial Management to help you understand your credit report? Contact us to learn more.
