What you should look for in your credit report
The beginning of the year is a time of resolutions and renewal. Even if you’re not the kind who hits the gym with renewed vigor come January, getting those post-holiday credit card statements can get your heart racing. That’s why the beginning of the year is a great time to check in on your financial standing and ensure you weren’t the target of holiday fraud and that your credit is in good shape. Here is what you should look for in your credit report.
Now is a great time to get a copy of your credit report and review it with a fine-toothed comb. It’ll help you keep on top of your finances, let you know if you should refinance your debt at a lower interest rate, and give you an idea of how to use your upcoming tax refund (if you are getting one) this year.
Question: Why should I want to see my credit report?
Answer: For a lot of our members, the idea of reading their credit reports seems daunting. There’s a lot of information and numbers, which could be bad news. It can be a reminder of past embarrassments, and, even at its best, it seems like homework. But, the value of going over your credit report is enormous. You can find errors and correct them. And discover what you need to do to get your credit score as high as possible. And understand what factors are affecting it. Because this could potentially save thousands of dollars on any mortgage funding, auto loans, or credit cards you get this year.
Question: Do I still need my credit report if I know my credit score?
Answer: While it’s important to know your credit score, a single number doesn’t have as significant an effect on your finances as some think. Financial institutions want to see your whole financial picture before deciding on a loan. Your credit score can be a handy way to summarize your credit history, but it can also vary from agency to agency, often by significant margins. Also, if you want to improve your credit score, you will need to see what’s actually on your report so you can take steps toward improving it. In other words, getting one of those free credit reports is not likely to be all you need to check up on your credit.
Question: How do I get my credit report?
Answer: Visit Annual Credit Report.com, because, in a world of online scams, the best choice is the one recommended by the government’s Consumer Finance Protection Bureau (CFPB). You’re entitled to a free copy of your credit report every year, and Annual Credit Report.com will give you a copy of your report from each of the three credit bureaus.
Question: Now that I’ve got it, what should I look for?
Answer: The first thing to do is ensure every account is familiar to you. Make sure nothing is outstanding on which you’re not currently making payments and there’s nothing in default. Remember to check balances as well. Just because the bureau is right that you have an account doesn’t mean they’re right in how much you owe or your account standing.
Question: Should I challenge everything?
Answer: Websites suggest you challenge everything on your credit report, even if it’s a valid charge, in the hopes that you’ll get lucky and won’t have to pay someone. Those websites are not trustworthy. It is illegal to file a false complaint; even if it weren’t, it’s incredibly immoral. Bottom line: It’s not worth committing fraud in the hopes that a credit agency or someone you owe money to drops the ball on paperwork.
Challenge every mistake, though. If you’re unsure what a charge is, call to find out. Make sure you follow up with every mistake you challenge, too. You shouldn’t pay for or receive penalties for charges you didn’t incur.
Question: How do I dispute an error on my credit report?
Answer: Contact the credit reporting agency that reports the error and the company that claims you owe it money. Make sure to send copies of any supporting documents you have, but don’t send the originals because you might need those later. While any company that corrects a mistake on your behalf must tell all reporting agencies, they may not follow through. After all, if they made a mistake when reporting the first time, they may make a mistake a second time. Be sure to follow up if necessary.
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