Thinking of buying a home or refinancing a mortgage? Maybe purchasing a car using a loan? What about getting a new job or property insurance? Did you know that all of these decisions and more, are at least partially dependent on your credit scores? That is why it is very important to keep up with the credit score sources.
In order to see what reports to the 3 credit bureaus, each person is eligible for one free credit report using an annual credit report. Additionally, most have heard of the Equifax hack which makes everyone susceptible to identity theft. Yet, another reason to know what’s on your reports. As we will discuss, keeping an eye on your credit reports is key.
What to Look for on Annual Credit Report
Many think if there are no late payments made, why look at a credit report. “My credit is perfect, so why do I need to check my credit?” That may be the case, but there is much more to check than just late payments. Here are a few key points to follow:
- Are bills reporting correctly?
- Are the bills yours?
- Verify personal information
- Compare all 3 bureaus
Are Bills Reporting Correctly?
Even though a person has never paid a debt past the due date, a late payment could show up. It is possible for a credit limit to report incorrectly. That may not seem too important but if a limit reports lower than actual limits, it could lower the credit scores. Either way, there could be mistakes by the creditor or the transfer of data to the credit bureau. In cases of a mistake, contact the creditor to make the correction or dispute the information with the credit bureaus.
Do the Bills Belong to You?
Check over each account line by line. It is possible for other peoples’ debts to appear on another person’s report. This is very common for the following scenarios:
- Similar names
- Lived or lives in same households
- Jr, Sr, III, or other suffixes in the name
- Similar social security numbers
- Identity theft
Verify Personal Information
Remember, it is very important to review everything on the credit report. Not just debt payment history and balances. Also, check the following:
- Name spelling & suffix (Jr, Sr, III)
- Previous and current addresses
- Date of birth
- Social security number
Although certain things are out of a person’s control, it is important to provide information accurately and clearly. When applying for credit, make sure everything is filled out correctly and have it repeated back to you. Do your part up-front to prevent issues.
Compare All 3 Credit Bureaus
Just because something reports correctly to one bureau, does not mean it is right on all three. Not all creditors report to all three bureaus, plus ones that do may report differently to each. Also, the credit bureaus could make the mistake. Keep in mind, some creditors or collections only report to one or two bureaus. If only one bureau is checked, erroneous information could be lurking on the others.
Therefore, use the annual credit report as a weapon against errors and identity theft.
How to Check Your Free Credit Report
To request a free credit report which provides an individual’s actual credit history pretty easily. It is as easy as going to www.annualcreditreport.com and following a few simple steps.
- Click on the button called “Request Yours Now!“
- Fill out the form
- Choose the credit bureau (each must be pulled one at a time)
- Request and review report online
There are a few important points to remember. First is that each credit bureau must be pulled one at a time. Then, there are security questions which must be answered to view the credit reports online. If the answers do not match well enough, the annual credit report must be mailed rather than viewed immediately online. Finally, the reports provided contain the actual credit report data but not credit scores. Many credit cards and other sources offer free to low cost credit scores for those who want to know a score, but keep in mind that free credit scores and mortgage credit scores are not the same as we explain in another article. “Why is my mortgage credit score lower than my free credit score?“
I Don’t Have a Credit Score
Dave Ramsey states, “The only way to have a good credit score is to go into debt, stay in debt, and continually pay your accounts perfectly.” Dave Ramsey has a wealth of information on getting out of debt, but a credit score does not require that a person pay interest and stay in debt. Actually, someone could have very high scores with just 1 – 2 current credit cards used the correct way. For instance, charging $20 on a zero balance card and then paying it off in full when due will keep credit scores very high. As older paid off debts roll off a credit report, the current active cards still remain. Therefore, this person should have high scores because they owe a very small percentage of credit limits, have no late payments, and a long history of credit.
Even if you do not have a credit score, there are ways to fix that. Check out other articles we have written in regards to building and improving credit scores.
Annual Credit Report
If you read our articles related to credit scoring, a common quote appears. “Everyone is a number, so you might as well have a good one.” When it comes to credit scoring, there are some basics that make sense. Obviously, paying bills on-time is one. Yet, there are other less known key factors such as balance related to high credit limits as a percentage. Actually, this factor accounts for 30% of a person’s credit score. Then, it goes by inquiries, credit depth, length of history, and more.
With an understanding of how credit works and a system of checking up on your actual credit reports, the chances of having a higher score increase. The higher the credit score, the better the chances of qualifying for a better mortgage rate, job, insurance premium, and more. Therefore, put a recurring reminder on your calendar to check annual credit report every year. The website is www.annualcreditreport.com.