Importance of Checking Your Annual Credit Report
Did you know that you can check your annual credit report for free once each year? You may not think that checking it every year is necessary. After all, you have a general idea of how your credit is. You’ve been approved for credit cards and auto loans. You make your payments on time and keep on eye on your balances.
What’s on my credit report?
First, you should know that you have three credit reports: Equifax, Transunion, and Experian. Different companies use a different credit report based on their needs. So, you see your accounts reported slightly differently across each credit bureau.
Additionally, your credit score will vary based on each report, as each bureau has its own way of measuring your score. On each credit report you can see:
- An overall history of all past credit accounts
- The specific payment history of each current credit account -- including the payment amount and the length of time it was past due if applicable
- Debt history – including past reported balances on all open accounts
Check for correct information.
As you look at the information listed above, make sure everything looks correct. If late payments or overdue accounts are reported, you’ll want to make sure the information reported is accurate since it impacts your score negatively.
You’ll also see personal information like address, phone number, and employer history. These are equally important to make sure these items are correct, primarily since they can be used to verify your identity in relation to credit pulls.
Verify that your history is correct.
When you close a credit card or pay off a loan, it doesn’t disappear from your report. The information about the length of the account and your payment history will still be available to creditors who look at your report. A favorable credit history is a great indicator that you’ve been able to manage money successfully.
However, if you see discrepancies on balances, how much you paid, and whether the account was in good standing, you should dispute those. Look back at bank statements and be prepared to argue your case to get the information corrected.
You may not be looking to make a big purchase now, but by checking your credit report regularly, you can be prepared in the future. Do an inventory of your credit history once per year while the information is fresh on your mind. Don’t wait until five or ten years down the road when details from the past may be a little hazy.
If you need help understanding your credit report, our team is always here to help.