You probably know how important it is to regularly monitor your credit report, but do you know how to get it, what to look for or what to do if you find an error? Here are some tips to help you get started:
Request your report (it’s free, once a year)
Put a reminder on your calendar to request your free credit report annually. AnnualCreditReport.com is the only website authorized by federal law and listed on the Federal Trade Commission (FTC) website for obtaining a free credit report. You will receive credit reports from each of the three major bureaus: Experian, Equifax and TransUnion – all from one place. Other credit reporting businesses may require you to sign up for monitoring services in exchange for your report while some others may automatically charge a recurring fee for these services if you forget to cancel your account. You are also entitled to a free credit report if a company takes adverse action against you, such as denying a loan, application for credit or insurance, or employment, but you must request it within 60 days of receiving the notice of action.
What is on a report?
Credit reports include a list of credit cards and loans in your name, and your payment history. The report tracks the amount due on each loan and the credit limit for each credit card. Notations include how often your debts were paid on time, the amount billed to your credit cards and how much credit utilization you use monthly on your credit cards. (Note: using more than a third of your credit utilization on any credit card can negatively affect your credit score – even if you pay off your statement in total each month.) They may also include businesses who obtained your report, your current and former names, addresses and employers.
Credit scores vs credit reports
Credit scores and credit reports are two different things. A credit report is a historical record of your credit and repayment history, while a credit score measures your credit risk, based on an algorithm using the information available in your credit report.
Your credit score will be different from each of the three bureaus. This is due to the fact that creditors do not necessarily report consistently to all three bureaus, and that each bureau has a distinct algorithm for calculating scores. To learn more about how your credit score is determined, check out our blog.
The federal law does not require credit reporting companies to share scores with you. Many credit card companies, banks and credit unions now share credit scores for free with customers. You will also receive your credit score if you apply for a home or personal loan.
Monitoring your credit
Once you receive your credit report, fact check the report to identify potential errors. Don’t forget about checking old, rarely used credit cards for unauthorized activity. If a retailer you frequent reports a breach and offers you free credit monitoring consider taking advantage of this service as it is better to be safe than sorry. However, not all credit experts agree on whether you should pay for a third-party service.
Disputing errors on your report
If you do find an error, there are actions you can take to try to get it resolved. Credit errors can be disputed online with the three major bureaus, but the Federal Trade Commission recommends sending your dispute via certified mail. You must include copies of documents that support your position as well as a letter explaining the suspected error. The FTC provides a letter dispute template on their website.
As a second step, the FTC says to contact the information provider (the company providing information about you to the credit reporting bureau). Again, the FTC offers a sample dispute letter and suggests to use copies of documents that support your position. The credit report companies must investigate items in question within 30 days, unless they consider your dispute frivolous.
Although monitoring your credit can be cumbersome, paying attention and doing your due diligence will ensure your good (credit) name stays intact. If you need an extra push, read our short article, “Benefits of a Good Credit Report.”
As always, contact a First Internet Bank Relationship Banker with any questions or if we can assist you in any way.