If you’re new to the world of credit, you might not know that you’re entitled by federal law to get an updated credit report every single year. It’s very easy to do so — by either logging on to annualcreditreport.com or calling the site’s provided phone number and requesting your report. You can also get your annual report by mail. Before getting your annual report, there are some things to know about how it works and how it can help you.
Annual credit reports are crucial in keeping up to date with your credit score and credit history, as they play a major role in all types of financial decisions like mortgages, bank loans, car purchases and apartment rentals.
“A landlord is going to check your credit because it’s going to tell them how likely you are to pay your rent on time, or if you are applying for a mortgage. That dictates if you get approved first and foremost, and then second of all, what’s your interest rate going to be on that loan,” personal finance expert Stefanie O’Connell told NY1 about the importance of looking over your annual score.
Several websites boast free credit reports, but the most accurate information regarding your credit history and score is the annual one that pulls from the three major credit reporting companies: TransUnion, Experian and Equifax.
Though the annual report does not include a FICO score — the credit report that the vast majority of lenders use to make credit decisions — but the report gives you all of the information that goes into calculating the score.
Check It Thoroughly
When you get your annual credit report, it’s important to look through it and search for errors, as you’ll want to identify any before it becomes available to landlords, lenders and other people who make finance-related decisions based on your credit history. When you get your report, it’s going to seem fairly daunting — pages and pages of data are there to examine and they all have to do with your financial history.
Luckily, the report starts with a table of contents, which organizes the various sections and makes it much easier to navigate. Next you’ll find a credit summary, which is presented in a chart that’s well organized and easy to read. After that, you’ll find a history of every account you’ve ever had and lots of details to go along with it. If you find an error in this portion of the report, or any for that matter, you’ll want to file a dispute immediately.
Interestingly enough, a recent Equifax survey showed that while most people know that they have access to their credit report every year for free, 42 percent of Americans don’t get it. The survey also found that 14 percent have never checked their annual report, and 12 percent don’t remember the last time they did.
These numbers are alarming because keeping up on your credit history is crucial to improving your financial situation and building credit. You might just get the reality check you need to get your finances back on track, and you might discover things about your credit history that you did not previously realize. Be responsible and check your score annually — not only is it free to do, but not doing it could cost you in the end.