Don’t be a Statistic
An estimated 10 million Americans have credit report errors so serious they face unfairly lowered credit scores and excessively high borrowing costs. Is it any wonder then that more and more people are taking steps to ensure they’re not part of that statistic?
Not in our opinion.
One of the best things you can do each year is to check your credit report for inaccurate data. Actually, make that your credit reports. By law, you are allowed to receive a free report once a year from each of the three big credit reporting agencies (CRAs) – Equifax, Experian and TransUnion. Because each CRA may have differing data based on the lender or business supplying the information, it is considered prudent to check all three.
Securing Your Credit Report
To receive your credit reports, you can contact each of three CRAs directly, or simply go to www.annualcreditreport.com. This site is funded by the CRAs and mandated by the federal government. Credit reports are created using information from businesses that have given you loans or supplied you with credit and reflect how much and how often you pay, as well as any credit limits and loan balances. However, not all businesses report to all three CRAs, so the information contained in each may vary.
According to the site, credit reports can include:
- A list of businesses that have given you credit or loans
- The total amount for each loan or credit limit for each credit card
- How often you paid your credit or loans on time, and the amount you paid
- Any missed or late payments as well as bad debts
Credit reports may also include:
- A list of businesses that have obtained your report within a certain time period
- Your current and former names, addresses and employers
- Any bankruptcies or other public record information1
The important thing to remember, however, is that your free credit report will not come with an accompanying credit score. While federal law does require the issuance of free reports, it does not do the same for your score.
Your credit score is calculated by plugging the information in your credit report into a credit score algorithm or formula. You may have multiple credit scores based upon who provided the score, and whether the company providing the score used their own scoring model or used a model available from a third party.2
Here are three ways to obtain your score:
- Check your credit card or other loan statement. Many major credit card companies and some auto loan companies provide credit scores for customers on a monthly basis. The score is usually listed on your monthly statement, or can be found by logging in to your account online.
- Talk to a non-profit counselor. Non-profit credit counselors and HUD-approved housing counselors can often provide you with a free credit report and score and help you review them.
- Pay to see your score. You can pay a fee to get your credit score directly from the credit reporting agencies. You can also pay to view your FICO credit score at com. Other services also offer to retrieve and report your credit score for a fee. If you decide to pay to view your credit score with one of these services, be aware that you are not required to purchase credit protection, identity theft monitoring, or other services that may be offered at the same time.3
Two other options are to use a credit score service or a credit repair service. Credit score services normally advertise “free” score reporting as a promotion and then sign you up for credit monitoring services at a monthly fee. That’s fine as long as you know what you’re getting into. Credit repair services use reports and scores to help you identify errors and can also help correct them. Unfortunately, most credit repair services also charge large upfront and ongoing monthly fees for their services — all without guarantee that any errors will be corrected.
So what are your options if you do find data errors on your report? We’ll talk about that in our next blog.