Wednesday, March 25, 2009

Why should I get my credit report annually?

Under the Fair Credit Reporting Act you are entitled to a free copy of your credit report once every 12 months from each of the nationwide consumer reporting companies – Equifax, Experian, and TransUnion. If you want to order your free annual credit report online, there is only one authorized website, The Federal Trade Commission has a link on their website (click here to access the FTC section on free credit reports).

So why should you get your credit reports annually?
  • To detect identity theft - Your report will show you any new accounts opened in your name as well as who has been checking your credit. If an account appears on the report that you did not open or if a company (especially a retail store where you have not applied for financing) inquires into your creditworthiness, you can take action to prevent potential identity theft from taking place or at least minimize the impact.
  • Uncover errors - The reporting agencies make mistakes, trust me! Equifax still has my married name on my report even though I changed back to my maiden name 14 years ago (and, yes, I changed it with the Social Security Administration so that isn't the issue as Equifax claims. You won't believe the hoops I have to jump through to fix it but that's for a future post.) Fortunately, this error hasn't impacted my credit worthiness. Other mistakes, such as reporting a late payment on a credit card when you paid on time, can have a significant impact on your credit score and will result in you paying a higher interest rate on loans or being turned down for a loan.
Personally, I recommend you view your credit reports at least every six months (many things can happen in 12 months). Of course, you will have to pay for the mid-year reports that you obtain but the small investment can save you a great deal of headaches.


amurphy said...

Totally agree! You might be surprised how many mistakes the credit bureaus make on credit reports. And there are things that are reported that you might not realize -- like if you're an authorized user of someone else's credit card (parent, partner, etc.), that card may show up on your report. Without even knowing it, you may be affecting someone else's credit, or even worse, someone else's behavior might be affecting yours.

I also think it's a good idea to check your credit every six months, especially in this economy in which credit can make or break you. To supplement your annual credit report from the government, you can get a free credit report AND score (you don't get the score for free from from The credit report and score are from the credit bureau, Experian, and should give you a good idea of where you stand financially.

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