Why Your Credit Report Matters and How to Check It
Why should you check your free credit report? Because it’s free! Checking your credit report on a yearly basis from each of the three credit bureaus is entirely free Under the Fair and Accurate Credit Transactions Act of 2003. Obtaining a copy of your credit report will not only alert you of potential errors in your report that are entirely not your fault, but will also make you aware of any acts of identity theft or credit card fraud. According to a study by the Federal Trade Commission, one in four people find errors in their report that affect their credit. Most of these errors are known as a mixed file, which means your report contains information from someone else’s report. Finding these issues sooner rather than later helps you to file a written dispute to the credit reporting company and set the record straight.
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Although the format of each report will vary, all credit reports contain basically the same categories of information.
Identifying Information
Identifying information category includes basic information like your name, your social security number, your date of birth, and your background employment information. This information is provided as a way to identify you. It is not used in credit scoring and is updated by the information you supply to lenders when applying for loans.
Trade Lines
Trade lines are just a listing of all your credit accounts. This category identifies all the accounts you have open, what type of account they are, the dates you opened each account, your limit on each account, your current balance on each account and your payment history. The types of accounts listed are identified as bank cards, auto loans, mortgages, credit cards, etc.
Credit Inquiries
The Credit inquires category of your credit report indicates who has accessed your credit report within the past two years. There are two sections of this category, voluntary and involuntary. Voluntary inquiries are your own requests for credit, whereas involuntary inquiries are lenders who order your report to make you a pre-approved credit offer in the mail. Note that every time you apply for a loan acts as an authorization to your lender to obtain a copy of your credit report.
Public Record and Collections
Public record information includes bankruptcies, foreclosures, suits, wage garnishment, and liens. This information is collected from an entirely public database including state and county courthouses as well as information about overdue debt from collection agencies.
The More You Know
Now that you know what your credit report will contain and the reasons you should be checking it regularly, get your first report today and set up a reminder to regularly obtain a new report in the future. Checking your credit report on a regular basis will not only save you from a potential financial disaster like identity thief or fraud, but will also help you to better understand your credit standing, become a better lender, and will give you an idea of how to rebuild bad credit. What are you waiting for? Use our sources and get your free credit score today!