How Do You Get Your Annual Credit Report?

Everybody makes mistakes. That goes for governments, banks and even the credit bureaus overseeing your credit reports.

You can spot mistakes before they have time to erode your credit score by ordering your credit report at least once a year. According to a study conducted by the Federal Trade Commission (FTC), one in five participants reported an error on at least one of their credit reports.

An error could mean having the wrong phone number listed under your personal information. Or it could mean spotting one too many open credit card accounts, which may be a sign of identity fraud.

These errors can linger on your credit report … well, forever. Credit bureaus maintain millions of consumer credit reports. Nobody is obligated to double-check the info in your financial portfolio, except, of course, you.

Credit Bureaus are, however, obligated by law to investigate any errors you report to them after reading through your credit report.

How to Order Your Free Annual Credit Report

You can get one free credit report a year from each of the three major credit bureaus: Experian, TransUnion and Equifax. You can order all three at once or space them out throughout the year.

By ordering all three at once you can compare the information between them and make sure they all match up. The credit bureaus don’t share your information with each other. This means you could have clean and accurate credit reports from TransUnion and Experian, while Equifax lags behind on updating your paid-in-full collection.

The downside to ordering all your reports at once is you won’t be able to get another free one for 12 twelve months. It may be nice to have a free credit report in your pocket should you need to review it before taking out an emergency loan or cosigning on the loan of a friend or family member.

In the end, it’s your decision whether to order them all at once or space them out. The Consumer Financial Protection Bureau (CFPB) recommends checking your credit report at least once a year, or before making a purchase that’ll involve a loan, like a car or a house.

Here are the five steps of ordering a free credit report:

1. Visit annualcreditreport.com: this site is run by the three major credit bureaus to give consumers a way to check their credit reports, in compliance with the Fair and Accurate Credit Transactions Act (FACTA).
2. Personal information: fill in your name, social security number, address and phone number.
3. Order your report(s): check the boxes for the credit report or reports you’d like to receive.
4. Answer security questions: these are questions about your background. They may ask about former loans you’ve taken out or past phone numbers and addresses. If your answers don’t match, you’ll have to call in and speak with a representative.
5. Get your report: you’ll have the option to pull it up online and print it out or have it mailed to you.

What to Look for on Your Credit Report

You need to scan the pages for information that’s outdated, inaccurate or just plain wrong. All credit reports will give you the same sort of information: accounts, public records, inquiries. The only difference is the order or format the information is presented in.

If you stumble across any errors, contact the credit bureau directly online or by mail. You need to explain what they got wrong and why. You’ll also want to send any documents supporting your claim.

Personal information

This section has your name, date of birth, social security number, and current and former addresses. A misplaced digit in your social security number should raise a red flag. So should any addresses or phone numbers you’re unfamiliar with. If you see that, contact the credit bureaus and get it corrected.

Accounts

This section lists all the accounts, open or closed, under your name. Mortgages, car loans and student debt all appear in this section. A very common mistake is for credit bureaus to list authorized users as account holders. Authorized users are not legally responsible for repaying an account balance, though late payments will tarnish their credit scores all the same. Make sure you’re familiar with all the accounts listed. Any accounts you don’t recognize should be reported to the bureaus.

Public Records

Here is where you’ll find information on any legal actions taken against you, such as tax liens, court judgments and bankruptcies. Like the previous sections, make sure all this information is accurate and up to date. Bankruptcies stain your record for 7-10 years. Debt settlements are there for seven years; anything longer should be reported.

Inquiries

This section lists whenever someone, usually a lender, has checked your account. Soft inquiries have no effect on your credit score. They’re often done by companies looking to send you promotional offers.

On the other hand, hard inquiries will drop your credit score a few points. Lenders need your permission for hard inquires. Make sure you recall authorizing each hard inquiry you see listed .

Ironically, credit reports won’t reveal your actual credit scores.  To see the three-digit number that weighs so heavily on your financial portfolio, you can either contact a nonprofit debt consolidation agency or your credit card company. They’ll show you your credit score for free. You can also find your credit score through FICO or one of the credit bureaus, but it’ll cost you anywhere between $5-$40 for a monthly membership.

How to Improve Your Credit Score

A credit report is not a static document; the information on it changes regularly. This is good news for anyone looking to give their credit score a lift.

The surest way to improve your credit score is to pay your bills on time and use only one-third of the credit you have available on any card. These two things account for 65% of your score.

Don’t expect change to happen on its own. You have to take initiative. This means budgeting by keeping track of your income and expenses. This is a hard challenge for a lot us. It is nearly impossible to gauge our amount of disposable income without taking a moment to sit at a desk and punch some numbers into a calculator.

The good news is you don’t have to go it alone. Nonprofit credit counseling is a free service that can help you wrangle in your expenses and maintain a balanced budget. These actions will pave the way to a good credit score, putting you in position for the best loan offers and rates.