The importance of getting and checking your credit report
A credit report gives a detailed history of how you handle debt, almost serving as a report card for a potential lender.
Banks and other financial institutions usually look at both your credit report and your credit score when deciding whether to lend you money and at what rate you should be charged. It is very important to review your credit report to make sure it contains correct information.
However, a recent poll from the Association of International Certified Professional Accountants found that one in three Americans has never looked at their credit report.
Surprisingly, 68% of people who checked their credit reports found at least one, and in some cases multiple, inaccuracies on their report. This can lead to higher interest rates on your loan, or perhaps a total denial of the loan.
It is important to know what to look for in your report, as well as what to do if you have inaccurate report information.
How to get your credit report
Usually, consumers can get a free credit report every 12 months from each of the three major credit bureaus: Equifax, TransUnion, and Experian. But during this pandemic and until April 20, 2022, consumers can receive one every week if they choose. You can get them on AnnualCreditReport.com, or contact each office individually by phone, mail or on their website. When a data breach occurs, consumers who are victims of the breach may also be offered free copies of their credit report.
How to read your credit report
Credit reports from all three bureaus will likely appear slightly different from each other since all data may not be fully available for all three offices. But most credit reports provide roughly the same information:
- Personal information, such as your name, address, and social security number
- Public records, including judgments against you and when the material falls out of your report
- Accounts are not in good standing, including anything that has gone to collections
- Accounts in good standing, including those that have been reimbursed
- Revolving accounts (mainly credit cards), including monthly payment history
- Credit Investigations: Companies that have asked for your credit history as part of a loan application, tenant selection, etc.
When reviewing your credit report, take a very close look at your public records, accounts that are not in good standing, and revolving accounts. Resolve any discrepancies as soon as possible.
Additionally, check for any unauthorized credit inquiries. If these appear, it could mean that someone is using your information without your consent. Report any false inquiries to each of the three credit bureaus. But also work to find out where this information may have been used to deter long-term identity theft.
How to report an error
File a dispute with the credit bureau if you notice an error on your credit report. If the error occurs on multiple reports, submit a dispute to each office individually. Disputes can be filed online or by mail. If you choose to file by mail, be sure to include all documents to support your application, such as bank statements or receipts. Send your dispute letter detailing the nature of the dispute, then request an acknowledgment that will give you assurance that the credit bureau has received the dispute.
You may be contacted by the credit bureau for additional information about the dispute. You will receive a notification when your dispute has been reviewed. If approved, inaccurate information should be corrected within 60-90 days. If the dispute is not approved, the file will remain on your credit report until you can provide sufficient evidence to support your claim.