Credit report. The only times we think or hear this word is when we are applying for a rental, a loan, possibly a job, or when your financial information has been compromised. The truth is that a credit report is an important document that can prevent or approve some of these big life decisions. You need to be aware of what type of information is being collected and how it is being reported to third parties that you authorize to pull a report.
A credit report is a historical listing of all your debts and payment history. Generally, your reports also contain your date of birth, Social Security number, any addresses you have resided, and a full/partial list of employers. The information is collected by three credit bureaus – Experian, Equifax, and TransUnion. Prospective landlords, lenders, and employers may request a copy of your credit report to see if you have any credit issues that may conflict with their approval process.
Credit reports can include your entire credit history; however, if you have a negative event on your credit report, it will generally fall off the report after seven years (bankruptcies are seven to ten years) and will no longer be reported. For example, I had the unfortunate experience of going through a foreclosure in March 2012. This foreclosure has prevented me from qualifying for traditional mortgage lending (a 15- or 30-year loan). However, in March 2019, this event will fall off my credit report and it will no longer be reported to a lender when I am looking for financing to purchase a home.
Checking your credit is important to do at least once a year to make sure nothing is being reported incorrectly that could adversely affect you. Here is the process you should go through at least once a year:
Check your credit report for free at annualcreditreport.com. Laws were put into place so that you can request your credit report once a year from all three credit agencies with no charge. Make sure you are using the website annualcreditreport.com as this is the only website that will provide a free copy of all three reports for you to review. Put the event on your calendar once a year – maybe on your birthday or each new year in January – so you remember to pull the reports for review.
Make sure that correct information is being reported correctly. Review the information that individuals and companies are seeing when they request a copy of your credit report. Credit bureaus are notorious for reporting inaccurate information, such as a debt that does not belong to you. However, you may also discover a debt that is old and outstanding that you didn’t know is affecting your credit. Knowledge is power, and you don’t know how to fix your credit if you don’t know what is being reported.
Dispute any inaccuracies in writing with the credit bureaus. You have the right to dispute any inaccuracies in your credit report. Write a letter to the credit bureau(s) stating the item(s) you are disputing. The bureaus have 30 days to respond to you in writing that they have either corrected the issue or to refute your claim for a change in your report. Making sure these inaccuracies are cleared up can prevent a lot of frustration, surprises, and stress the next time you need a credit report retrieved.
Have you pulled your credit report in the past year? If so, did you find any inaccurate information?