If there were a song about keeping yourself safe from financial scams, the refrain would be “Check your credit report!” But, practically speaking, many people don’t know how to check their credit report or know why it is important.
Checking your credit report isn’t some fancy financial maneuver. It is probably a lot easier than balancing your checkbook – just follow these 4 easy steps.
Step 1: Get Your Credit Report
Step 2: Read Your Credit Report Carefully
Step 3: Report Errors and Inaccuracies
Step 4: Monitor Your Credit Report Regularly
Let’s look at each of these steps in detail.
Step 1: Get Your Credit Report
There are three different credit reporting agencies: Equifax, TransUnion and Experian. Even though they share data amongst themselves, each makes its own report. You are entitled to one free report from each agency every year.
Tip: If you'll be making a major purchase in the next year, check all three bureaus before you start shopping. You can catch inaccuracies before lenders see your information and score. Otherwise, it makes sense to stagger them and view one report every four months. This puts the shortest amount of time between checks.
You can get your credit report for free at annualcreditreport.com. This is the only website approved by the Federal Trade Commission (FTC) for this purpose. Be on the lookout for “imposter” websites operated by scammers. They may use similar-sounding website names or common misspellings to try to trick you and get your personal information.
There are other situations under which you can get a free copy of your credit report.
- If you're denied credit, you can request a copy of the information that was used to make that determination. You must submit your request within 60 days.
- If you've been the victim of certain kinds of fraud, you will receive a free copy of your credit report. You can utilize the report to help you make it right. These checks will never hurt your credit score.
If you have requested your report online, it should be available immediately. You may need to answer a few questions to verify your identity. The service may ask if you shared an address with anyone else or about previous streets you have lived on. Once you answer these questions, you will get your credit report.
Step 2: Read Your Credit Report
Although this may sound like a “duh” moment, many people may be overwhelmed with how much information is reported. With your credit report in your hands, take the time to look it over carefully.
Each reporting agency reports the information slightly different, but each report will have a list of accounts. The list of accounts may be broken down by type (mortgage, installment, revolving and other) or listed by date.
There are three main things to look for when reviewing your credit report.
- Look to make sure that accounts are open in your name.
If there are any accounts you don’t recognize, make a note of them and contact the credit reporting agency. Look particularly for accounts going to P.O. boxes or listed with addresses in other states.
- See if there is any negative or collection activity.
“Negative items” include bankruptcies, accounts in collection or accounts reporting as past due. Such activity is another good place to check for fraud. If someone else opened an account in your name, they likely will not be paying the bills. You will also want to look for inaccuracies that may be hurting your credit score. If there is an account listed here that was discharged in bankruptcy, for example, make note of that, too.
- Look at the number and frequency of inquiries.
The list of inquiries shows you the number of times someone has checked your credit. No one can do this without your permission. If there are more inquiries than you remember, it could be a sign someone has stolen your identity. It might be worthwhile to put a freeze on an ability to open new accounts until you’ve gotten everything resolved.
Step 3: Report Errors and Inaccuracies
Each reporting agency maintains a separate error-reporting process. That means you will have to report each error to the agency that made it.
For basic errors, like address, name or personal information, the agency can make those corrections with minimal trouble.
For more serious errors, you will need to send a dispute letter. The FTC has a template for a dispute letter available on its website. You can use the template or make your own. Either way, you will need to clearly identify the accounts or items you are disputing.
What to Include on Your Credit Dispute Letter
- Use partial account numbers or other numerical information so the agency can more easily identify the account in question
- Provide an explanation as to why you consider the item an error
- Attach copies (not originals!) of documents that support your claim. Examples include police reports for stolen or lost wallets or bankruptcy orders that discharged a debt. Also letters from a lender indicating an account was opened fraudulently or receipt copies showing you paid in full.
TIP: Send your letter via certified mail.
Yes, sending a letter via certified mail costs a little more than a stamp. However, you will get proof of receipt from when the letter was delivered.
What Happens Next
Reporting agencies have 30 days from the date of receipt to decide about your dispute.
The reporting agency will send your dispute to the information provider. This is the company that told the agency about the account or negative item. They will then investigate the item in question.
If the reporting agency finds your claim to be correct, you can do the following.
- Request they send copies of the updated report to anyone who received your credit report in the last six months
- Request they send copies to any employer who pulled your credit report over the last two years.
The reporting agency is also required to send you an updated copy of your credit report with new information included.
Step 4: Monitor Your Credit Report Regularly
Checking your credit report at least once a year is the only way to keep safe from credit problems. It can even help you identify theft or other financial crimes against you.
If you need assistance, McCoy FCU is here to help. Call or visit the credit union branch closest to you to find out how we can make your life easier!
