The U.S. government has now made it possible for all citizens to receive, once a year, a free copy of each of their credit reports from the three major credit-reporting bureaus - Experian, Equifax and TransUnion.
Why would you want to do this? For numerous reasons, the least of which is because being forewarned is being forearmed. In other words, when applying for a loan or for credit you're in a much better position when you know ahead of time what kind of position you're in. That way you can fix any mistakes - yours or the credit bureau's - before anyone else has a chance to see the negative item. Studies report that errors exist in somewhere around half of all consumers' credit reports, and that more than 10 percent of these errors are problematic enough to cause denial of credit, employment or insurance.
You may or may not be planning a big purchase - a home or a car - or need to borrow money for an emergency right now, but someday you might. This is where your credit report will come into play. Your credit report is a primary piece of information that most lenders use to determine how creditworthy you are (or aren't). You don't want to wait until the last minute, or until it's too late, to find out that your credit report has mistakes that have been in your power to fix all along.
If you take corrective action toward a legitimate error appearing on your credit report, it may take a month or two before a credit reporting company receives notification from your creditor that you have taken some sort of corrective action. Make sure you notify the credit-reporting agency with the now-inaccurate report and ask them to send you a corrected copy. Likewise, if the credit bureau is at fault for the negative item (in other words if it's an error on their part), also make sure you request they send you a corrected copy.
You can either request all three credit reports at once or request each of them individually at separate points in time. If you're planning to apply for credit or a loan soon, then go ahead and order all three at once. But for regular ongoing credit maintenance it's a good idea to order one of your three free credit reports every four months.
Beyond simply being allowed to receive these three free reports each year, you are also entitled to receive a free copy of your report if:
- You have applied for credit and been denied;
- You are unemployed but plan to apply for a job within two months;
- You receive financial assistance from public welfare;
- A revision has been made to your report (as noted earlier);
- Your report contained information that was inaccurate due to theft or fraud.
To fix errors on your credit reports you must first be aware of their existence. Therefore, check at least one of your reports every four to six months, and keep in mind that each report may contain slightly different information. When you find a mistake, take action to rectify it straightaway.
Avoid opening accounts you don't need and shut down all accounts you don't use. The exception to this may be your longest-standing accounts and credit accounts with your highest limits, the reason being that these two factors - having a long credit history and having a lot of available credit that you're not actually utilizing - can have a positive impact on your credit score; a three digit number used to summarize a consumer's creditworthiness. Also avoid opening many accounts at the same time, even if one or more carries a zero balance. And above all, start taking charge (pardon the pun) of your debt. Always pay your minimum payments before they're due and, whenever possible, pay as much as you can. If you can pay your entire balance down at once then that's the best thing you can do for your credit.
