Credit reports (and the credit scores based on them) are now used for more than just getting loans. For example, your credit reports may be used to determine whether or not to rent to you, to decide how much you might be charged for some types of insurance, to figure out whether or not to offer utility services (including cell phone service) to you without a deposit, and sometimes even whether or not to hire you for a job.
So, even when you’re completely committed to getting out of debt, it’s important to check your credit reports regularly. They could be wrong. Reviewing them could also help alert you to identify theft that you might not otherwise know about.
But wait, what IS a credit report?
A credit report is basically a collection of information about you and some of your financial habits. (Those that have been reported by various creditors to credit reporting agencies.) This can include loans you’ve taken out (including credit cards), your payment history, your available credit, public records such as bankruptcies or judgments, etc. The reports also include identifying information about you such as your name, address, social security number, birth date, phone number, and employment history.
Errors on credit reports
The bad news is that a recent study by the FTC found that 26% of the study’s participants “identified at least one potentially material error on at least one of their three credit reports.” According to the study, participants looked for credit report errors in 17 different areas. Such a high percentage of potential errors plus many areas where there could be incorrect information equals two more excellent reasons to review your credit reports annually.
Where to get your credit reports for free
By law, you can get a copy of your credit report from the three major credit reporting agencies (Equifax, Experian and TransUnion) once a year for free just by asking. But, there’s only one site where you can definitely get them for free: annualcreditreport.com. That’s the site authorized by the US government to provide the reports for free. Note that they will still try to sell you your credit score, but you can absolutely get your credit report for free without buying your score.
You can also get free copies of your credit reports if you’ve been denied credit, insurance, or a job because of what’s on your credit report, but you have to ask for them within 60 days of being notified. (There are a few other special cases where you can get a free copy too. See Credit Repair: How to Help Yourself for details.)
If you find an error…
If you find something wrong on a report, each of the credit reporting agencies has a dispute process that you can use to inform them of the error.
In a nutshell, you’ve got to report the error in writing, providing details and copies of any documentation you have that can help prove it’s a mistake. (Here’s a sample letter for disputing errors on your credit report.) They then have 30 days to investigate. The FTC recommends that you “send the letter by certified mail, ‘return receipt requested,’ so you can document that the credit reporting company got it. Keep copies of your dispute letter and enclosures.”
The credit reporting agencies then notify the organization that provided the information to them, and that organization must investigate and report back. When all the investigating is done, the credit bureau must give you the results in writing, plus a free copy of your report if it’s changed as a result of the dispute. If you have a complaint about how your dispute was handled, you can file a complaint at the Consumer Financial Protection Bureau.