What is a credit report?
A credit report is basically a report card for your credit worthiness. It has your personal information (to include current/former names used, addresses and possibly employers). It also lists any credit that has been taken out in your name and rates your payment history – either in good standing or poor standing. If a bank reports to the credit bureaus that you have made late payments or are past due on any payments, this information typically lasts on your credit report for 7 years. Bankruptcies can last up to 10 years on a credit report. On the other hand, positive feedback from banks (on-time payments and positive history) may last on your credit report forever.
In addition to the positive and negative feedback from banks, you can also see any credit inquiries made to your name. This means that anytime a bank has pulled your information to see if you might qualify for a credit card or loan, it will appear on your credit report.
Why is it important?
Most people know that there is a credit score (number) associated with a credit report. This score rates your ability to pay back your debt and shows a lender how risky loaning money to you might be. The higher your score, the less risky of a borrower you are and the lower potential interest rate you may get on future debt.
Since credit scores are linked to paying bills on time and being financially reliable, many vendors other than banks are now looking at your credit report. Landlords, employers and utility companies are starting to pull this information to see how responsible you are.
In addition to being aware of what information is being shared with the outside world, it is extremely important to check your credit report at least once a year for identity theft. Identity theft is becoming more and more common and your credit report is a quick way to check if there has been any credit taken out in your name without your knowledge. Have you ever heard of horror stories where someone had taken out a vehicle loan or even a mortgage in a person’s name without them knowing? Checking your credit report regularly can help you catch any discrepancies and report it back to the credit bureaus, hopefully before the problem gets too big.
*Active duty service members may request an active duty alert to be put on their credit report which requires the lender to make extra efforts to verify your identity when new credit is requested in your name. The alert lasts for 12 months and may be renewed. It also takes your name off of the contact lists for preapproved credit cards and loans for 2 years.
Where to get your FREE credit report:
1. Annual Credit Report
Annual Credit Report, like its name suggests, allows you to receive one free credit report annually from each of the 3 main credit reporting agencies (Equifax, Experian and TansUnion). You can check all 3 credit reports at once, or you can space them out say every 4 months. No credit card is necessary, but you will only receive the credit report for free, not your score. The credit report itself is invaluable information and is all you need to check for identity theft. Check it out at www.annualcreditreport.com
2. PFM on BaseYou nearest installation should be equipped with a personal financial manager that can provide an active duty service member and their spouse access to their credit reports and scores for free. This program has been made available by the FINRA Investor Education Foundation and SaveandInvest.org.
3. Bank if Denied Credit
Thanks to the Fair Credit Reporting Act, you are legally entitled to a free credit report if a lender denies you credit. This request must be made to the lender that you were seeking credit through.
4. Credit Karma
Credit Karma is an entirely free service that allows you to check your TransUnion and Experian credit score and report as often as you would like. No credit card information is needed to sign up and they also have free tools and calculators to track your credit and improve your score.
Do you know of another way to get your credit report for free? Let us know!