Why Check Your Credit Report?

Your credit report is a detailed record of all of your credit accounts, including when you opened them, how much you borrowed, how much you currently owe, when you last made a payment and how many late payments you have made. Because the credit score that lenders see when you apply for credit is based on your credit report, having a good report is critical for receiving credit in the future.

Maintain Accuracy

It is your responsibility to ensure that all of the information that appears on your credit report is accurate. Lenders sometimes make errors in reporting your account information, and these errors can damage your credit score. When you check your credit report, read each piece of information and ensure that it matches your records. Things to look for include the dates on which accounts were opened, the credit limits on your credit cards and any negative information, such as missed payments or collection accounts. If you find anything inaccurate, send a dispute letter to the credit bureau that identifies the mistake and asks that it be corrected.

Detect Identity Theft

If someone applies for credit in your name and with your Social Security number, this will appear on your credit report. Checking your credit gives you the opportunity to detect identity theft and move quickly to fix the problem. If you notice accounts you do not recognize or hard credit inquiries you did not initiate, you might be the victim of identity theft. The Federal Trade Commission outlines the process for repairing identity theft, which includes placing a fraud alert on your credit report, closing fraudulent accounts and filing a police report.

Note Areas to Improve

If you are planning to apply for credit in the future, checking your credit report can give you an idea of where you stand and how you can improve your credit to boost your score before your next application. For example, if your report shows a few missed payments, set up automatic payments on your accounts or schedule them on your calendar to avoid missing more payments. If your report shows many credit inquiries, stop applying for new credit for a while to boost that portion of your credit score.

How to Check Credit

All consumers are entitled to one free copy of their credit report each year from each of the companies that maintains a credit report. To get these free reports, use the Annual Credit Report website to order a report from TransUnion, Experian and Equifax. You can order all three reports at once or get one every four months to monitor your credit throughout the year.