Plan to check your credit reports once a year. It's free and can save you major credit hassles. The Fair Credit Reporting Act gives you one free credit report per year from each of the three major credit bureaus: Equifax, Experian and TransUnion. By checking them annually, you will catch any errors that can hinder your ability to obtain a loan, job or rental housing.
It’s a good idea to check your report at the same time every year so you know that the new data you're seeing isn't more than a year old. To help you remember, choose a time of year when other regular events occur. For example, you could check your report around the new year, a birthday, or tax time.
What is a credit report?
A credit report is a summary of financial history from institutions that report to credit bureaus. The report includes loan paying history and status of your credit accounts. It has five types of information:
- Identifying information (such as current address, social security number, date and place of birth).
- Public records (such as bankruptcies, judgments, and tax liens).
- Collection agency accounts.
- Credit accounts.
- Inquiries made to your account.
Your credit report is different from your credit score. A credit score is a number given to a person that shows lenders their capacity to repay a loan.
Credit report errors are common
A recent study by the Federal Trade Commission found that one in four consumers had an error on their credit report. The study showed that some errors were minor. But about 5 percent had errors that changed their credit score. That change could result in higher interest loans. This cost them money they could have otherwise saved. Remember: It's up to you to check your credit report for errors. No one else will, and the error will remain on your report for a long time, which could reduce your credit score.
Also, check the report from each credit bureau because each report is unique. They will vary because your lenders don't always report to all three credit bureaus. This accounts for differences in your reports. The mistake may occur on only one of the reports. If you don't check all three, you may miss an error.
Credit scores aren't always free
The Fair Credit Reporting Act entitles you to a free credit report from each bureau once every 12 months. This does not include a free credit score. You may need to pay a private organization to see your credit score. But, some financial institutions give customers their credit scores at no charge. If the information on your report is correct and you're not planning to apply for loans in the next year, you may not need to know your credit score.
Where to order credit reports
To order, visit annualcreditreport.com, call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.
Consumer Financial Protection Bureau (2014). What is a credit report?
Federal Trade Commission (n.d.). A summary of your rights under the Fair Credit Reporting Act
Federal Trade Commission (n.d.) Free Credit Reports
Credit Report Review Checklist — Consumer Financial Protection Bureau — The checklist is helpful in making sure that you’ve thoroughly checked all pertinent information.
Annual Credit Report Request Form — Federal Trade Commission — This is the form to use when you want to request copies of your credit report from each of the three major credit bureaus. You may also request by phone or online.
AnnualCreditReport.com — The website created by the three major credit bureaus for people to request their free reports.
Reviewed in 2020