In the last few years, US consumers were reminded persistently to check their credit scores – for free! – by a singing, down-on-his-luck guy. These TV commercials were promoting a specific website, FreeCreditReport.com; however, the “free” in the name was somewhat deceptive. Website users would later discover that the free offer was contingent on signing up for Experian’s Triple Advantage service. They would be charged a monthly fee shortly after checking their credit report and score. Due to the public outcry over this misleading advertising, the three credit bureaus (Experian, Equifax and Transunion) have made more efforts to promote their jointly run website: www.annualcreditreport.com.
This is truly a completely free way for consumers to check their credit reports. Annual Credit Report was started due to requirements of the 2003 Fair and Accurate Credit Transactions Act (FACTA). This website enables users to check their credit reports with each of the three bureaus once a year for free. Unfortunately this doesn’t allow you to check your credit score, but it at least provides you with a clear understanding of what’s on your credit report.
Annual Credit Report is very easy to use. After filling out some standard name and address information, you are asked which bureau reports you want to see. It’s advisable to check all of them, as discrepancies could happen at one but not the other two. From there you will go through an additional verification process with each credit bureau. They will ask you questions about your credit and personal history that only you should know – things like loan payment amounts and past employment. After this you’ll be able to view your credit reports. The formats vary between the bureaus, but each will highlight your current accounts and your history with the accounts. They’ll cover how long you’ve had accounts, what your credit limits are, and your payment history.
Reviewing your credit report is extremely important for two reasons. First and foremost, you need to make sure it’s accurate. Keeping tabs on your credit report could help minimize damage if your identity is stolen. Also, as previously mentioned, the bureaus can make mistakes. There have been mix-ups with relatives with the same name, or accounts have been reported to the bureaus incorrectly. Reporting errors to the credit bureaus will help you maintain a strong credit history. Secondly, checking your credit report can show you your strengths and weaknesses. It will show you delinquencies on accounts in the last few years; it will also show you your debt to credit ratio, which affects your credit score. Viewing your credit report gives you an idea of what you need to work on to improve the strength of your credit.
If you have a history of credit problems or have had issues with credit fraud, a paid credit monitoring program might be best for you. There’s nothing wrong with paying for credit monitoring if you truly need it. Likewise, if you really want to know your credit score, you can certainly pay to view it. However, if you plan on applying for a loan in the near future, most lenders will disclose your credit score at the time of application. You might as well save yourself the fee in that case. If you do want to sign up for credit monitoring, make sure to go to one of the credit bureaus’ web sites so you know the service is legitimate. For those who simply want to monitor their reports on a regular basis, Annual Credit Report is the best way to do so.
Sources:
Annual Credit Report, https://www.annualcreditreport.com/cra/helpabout
“Correcting Your Credit”, MyFairCredit.com, http://www.myfaircredit.com/s/correcting-your-credit
Personal Experience