Free Credit Report & Six Good Reasons to Check it Now!

When was the last time that you checked your credit report? I feel terrible to admit it, but in my case, it has been a while! For some reason, it’s one of those things that you plan on getting around to doing, but never actually remember to. The good news is that procrastination aside when you know the rules, you can get free access to your credit report.

Once a year, you can request a free copy of your credit report from all three credit monitoring bureaus. Watching what shows up in your report every few months is a good habit. It helps you become aware of the status of your finances and remove any inaccurate information.

What Does Your Free Credit Report Contain?

A free credit report is a record that paints a picture of your financial habits. It contains a bunch of personally identifiable information like your name, social security number, and address where you have lived. Also, It lists all loans, mortgages, and debts in your name.

Your free credit report also details your bill-paying history, that is, whether you pay on time, late, or have abandoned making payments. Besides, it reveals whether you have any liens against your property, have filed for bankruptcy, been foreclosed on, repo, etc.

Lenders, employers, and even landlords check your credit report to decide whether they want to do business with you. So, as you can see, a credit report is like an x-ray of your financial life. That’s a lot of information! And you need to make sure that it is accurate by reviewing it often.

Why should you check your credit report now?

The following are six good reasons to review your credit report ASAP.

1. Because it is free!

By federal law, consumers in the United States are entitled to access their credit report free of charge once every 12 months. You can get a free copy from each of the three major credit reporting bureaus:

• Experian
• Transunion
• Equifax

To claim it, go to www.annualcreditreport.com. Make sure you are on the right site. There are plenty of other websites that look legit, but that charge you for this service. Don’t fall for scams!

Also, know that access to your CREDIT REPORT does NOT include access to your CREDIT SCORE or FICO score. In fact, your credit score or rating is often offered at a fee. Sometimes credit card companies and other financial services provide it to their clients along with their monthly statements without an extra charge.

2. To be proactive against identity theft

The massive Equifax data breach announced in September of 2017, affected millions of Americans, including myself. You never know when you will become a victim of identity theft. So, I recommend checking your credit report immediately.

You want to make sure that all the accounts that show up actually belong to you. If you see any new credit accounts popping that you did not authorize, notify the credit bureaus. Check out this article I wrote for more on this topic: Now what? Life After the Equifax Data Breach.

Do You Want To Improve Your Finances On The Go?

3. To correct any mistakes

It is likely to find mistakes on your credit report. A few years ago, I realized that somebody had used my name and old college address to order music CDs and never paid for them! Sure enough, it was showing on my credit report as a collections bill.

I became aware of this issue by checking my credit report and filed a dispute with the credit bureaus. After a little paperwork and some back and forth to confirm that I hadn’t ordered those music CDs, they finally removed the inaccurate record from my file.

4. To get better interest rates

Mistakes, errors, late payments, unpaid bills, bankruptcies, liens, and more, affect your creditworthiness. When lenders perceive you as somebody who is not responsible for paying bills or managing money, they might not want to loan you any. You can appear to be a high-risk client and might end up getting high-interest rates on your loans.

If you are borrowing money, for example, to buy a house or a car, even a one percentage point in your interest rate will make a massive difference over the life of the loan. Now, you should also know that I am a big believer in living 100% debt free, so I discourage people from obsessing about having a high credit score.

There is a big difference between a credit report and a credit score. To have a good credit history, you need to make sure to pay your bills on time. But to have a high credit score, you need to borrow money and stay in debt continually. Ideally, I would love for you to become totally debt-free in which case your credit score will disappear.

True story

Many years ago, before I understood the advantages of not being in debt, I applied for a car loan to get a brand new 2005 red Dodge Neon. I had never checked my credit report before. At the dealership, I learned that I had a $16.00 gas bill showing up in collections from my good old college days. SIXTEEN DOLLARS! As it turns out when I moved out of my college apartment, the gas company didn’t have a forwarding address and reported this as an unpaid bill.

I had no idea! Regardless, the collections bill brought my credit score down. It didn’t prevent me from getting the car loan, but it did result in a higher interest rate. Lesson learned!

5. To course-correct and open new doors

Knowing your credit history can be a sobering experience because I believe that the status of your personal finances is a reflection of who you are.

Your behavior towards paying your bills can tell A LOT about your personality. Are you organized with your money? Do you pay your bills on time? Perhaps you have filed for bankruptcy? Is your credit history improving or getting worse?

Good to know

Having a bad credit history can have many negative implications not only in your finances but also in your life. For instance, it can hinder your ability to get a job. Employers looking at your credit report can interpret that information in terms of how responsible, reliable, and trustworthy of an employee you might be.

Credit reports not only include information about your finances but also about any lawsuits. Let’s be honest, we all know that with this information, employers can judge whether or not you are a person of character, and a good fit for the job and the company.

For instance, if you are applying for a job at a bank and your report shows that you have filed for bankruptcy, the employer may see that as a red flag. Adverse credit history can potentially ruin your chances of getting a job.

6. To be able to rent an apartment or home

It is a pretty standard practice for landlords to run credit reports during the leasing application process. Furthermore, based on your credit history, they can decide whether to rent to you or not.

Just think about it. Would you like to rent your own home to somebody that has a history of not paying the bills? Wouldn’t you feel more confident as a landlord knowing that your tenants have been financially responsible?

Chances are financially responsible tenants are more likely to pay the bills and also take care of the property!

As you can see, staying on top of your credit report is extremely important!

In conclusion: Free Credit Report & Six Good Reasons to Check it Now!

Know your consumer rights and take advantage of them! Monitor your credit activity at least once every 12 months from each of the three credit reporting agencies: Transunion, Experian, and Equifax. If you find any inaccuracies, make sure to contact the credit agencies immediately.

Uncorrected mistakes can result in significant headaches! If you discover lines of credit that you did not authorize, you might be dealing with a case of identity theft. You need to be proactive and report it to the authorities.

Being aware of your credit history can empower you to take action and make a positive change in your personal finances. When you take ownership, you will be perceived as a responsible and trustworthy individual, and more opportunities will open up for you!

Do You Want To Improve Your Finances On The Go?

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Free Credit Report & Six Good Reasons to Check it Now!