Why You Should Check Your Credit Report Annually

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Negative information in your credit report can be detrimental to your finances. This information can prevent you from buying a home or car. Because of this, monitoring your credit report is imperative.

But where do you find your credit report, and how do you read it? If you find a problem, how can you fix it?

Importance of Monitoring Credit Reports

A credit report helps you determine and understand your current credit position. It allows you to see what lenders and credit card companies see.

Because lenders and credit card companies use these reports to determine your creditworthiness, a mistake in them could cause you a serious financial setback. It could be the difference between buying a home and renting.

Monitoring a credit report allows you to stay proactive in guarding your finances. For example, if you are about to make a large purchase, like a house, check your report three months before applying for a home loan. If there is a problem, you can resolve it before it derails the lending process.

Credit Score Not Based on Report

Your credit score isn’t part of a credit report. Companies that provide credit scores base them off of credit reports. But each company has a different scoring model. That means credit scores may vary.

Another reason a credit score might vary is a lender’s reporting. Not all lenders report to all the nationwide credit bureaus. Some may report to only one or none.

But since the information from a credit report affects a credit score, it’s imperative that the report be accurate and current.

Pulling a Credit Report

You should check your credit report at least once a year. It’s also important to pull it if you suspect fraud or are going to make a substantial purpose and need a loan.

Three major credit bureaus provide credit reports: Experian, Equifax, and TransUnion.

But you don’t have to go to each one individually to obtain a report. You have yearly free access to your credit reports by federal law. Use the government-mandate website, AnnualCreditReport.com, to access your report. Typically, you receive one free report yearly. But currently, until the end of 2023, you can receive a weekly report for free.

When pulling your credit report from the government-mandate website, make sure you have the correct site. There are fraudulent ones that have similar names.

Once on the website, you’ll need to enter your personal information, including your Social Security number, address, and birthdate.

Other data will be needed, and it will be matched against files for identification.

You’ll be able to order reports from one or more major credit bureaus, including Experian, Equifax, and TransUnion.

There are also security questions you'll need to answer. These are questions about your finances that only you would know. For example, who holds your home mortgage? If you have problems answering the questions, you can request your reports be mailed.

Reports can also be ordered via phone at 877-322-8228. If you want to order reports by mail, send a request form.

How to Read Credit Report

A credit report will have a personal history. Besides your name and other identifiers, it will also have your present and past home addresses. Always check that the information is correct. All the information should pertain to you. A misspelled name or wrong initial could misidentify you. If it’s not accurate, it’s a red flag.

Your employment history will also appear. And although it doesn’t affect your credit history, it will aid in identifying you.

The largest part of the report is the credit history. It is broken down into current and closed accounts, payment history, and current balances. It will also show the names of creditors and lenders, credit limits and loan amounts.

Any activity having to do with your credit will appear on this report.

Be Aware of Credit Report Errors

Several errors can appear in your credit report—for example, wrong account numbers or accounts that aren’t yours. There also might be inaccurate credit limits or loan balances. The wrong account status might also appear—for example, a late payment when you paid on time.

Outdated information may also be reported. Derogatory marks must be removed after seven years. Check that these are gone if you’ve had a foreclosure or bankruptcy.

How to Dispute Credit Report

When disputing an error, first check with all three bureaus. Some lenders don’t report everything, so there could be some differences.

You can file as many disputes as you need, and there is no cost. Although filing a dispute doesn’t hurt your credit score, it may help if you find something erroneous that can be corrected.

Gather the paperwork to dispute erroneous marks. If you have been the victim of identity theft, you’ll want a copy of your Federal Trade Commission complaint or a police report. You’ll also need credit card statements or loan documents. Sometimes you might need death or birth certificates or a divorce decree.

Any paperwork that can prove your claim should be submitted.

How Long Is Bad Credit Reported

If you have derogatory items such as collections, repossessions, or foreclosures on your credit report and they are not fraudulent, you may need time to remove them.

If you can’t dispute the negative marks, then it could take seven to 10 years, depending on the type, to see them removed from your credit. For example, bankruptcy Chapter 13 takes seven years to be removed. But Bankruptcy 7 takes 10 years.

Protect Credit by Monitoring Credit Reports

Bad credit can follow you for years. Ensure you have the good credit you need by monitoring your credit report. That way, you can nip fraudulent reports in the bud, correct wrongly reported information or start to work on credit problems.

The Epoch Times Copyright © 2022 The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.