If you’ve never made it a habit to regularly check your credit score, now’s the time. Why is that?
So, here’s the deal: usually, you’re only able to get one free credit report from each credit bureau every 12 months. Until April 2021, however, the big three credit bureaus – Equifax, Experian, and Transunion – are offering free weekly online credit reports to help consumers better manage their finances.
We’ll get into the benefits of checking your credit report regularly later on in the article – first, we’re going to walk you through how to obtain your free reports.
How to get your free credit reports
- To begin, go to annualcreditreport.com. Once you’re there, you’re going to click the maroon button that says, “Request your free credit reports”.
- You’ll then fill out a form with basic personal information – your name, DOB, social security number, address, etc.
- After you complete the form, you’ll have the opportunity to request one, two, or all three of your credit reports. Normally, it would make sense to space out your requests through the year – for example, one credit report every four months. Now that your reports are available weekly, there’s no reason not to request all three.
- Once you get through a few security questions, you’ll be able to view your reports and have the chance to dispute any inaccuracies.
An important note on credit scores: you will not find your credit scores while looking through your credit reports. Fortunately, many credit card companies provide this information with your monthly statements for free.
If you’re currently a Best Egg customer, you can access your FICO® Score by opting-in through our customer service website. Once you opt-in, you’ll be able to see a 6-month historical trend of your score and your top score factors from FICO, which may help you identify factors impacting your score and how to understand them. Better yet, your scores are updated on a monthly basis – so you’ll always be up-to-date on how they’ve changed. For more information on accessing your FICO® Score as a Best Egg customer, click here.
Alright! Now that you know how to access your credit reports, we’re going to cover the types of information you can find in them. After that, we’ll share a few reasons it’s a smart financial decision to check your credit reports regularly.
What information can I find in my credit report?
Before we explain what information you can find in your credit report, let’s briefly review what a credit report is. A credit report is a detailed record of a borrower’s credit history that lenders review to determine their creditworthiness.
Essentially, your credit report explains your relationship with debt. If you have little debt and a good payment history, lenders will be more likely to approve you for a loan or line of credit. As you can probably guess, lenders are more averse to giving loans or lines of credit to borrowers with a lot of debt and a poor payment history.
Now, back to the information you can find in your report.
While each credit bureau formats your report in different styles, the categories of information found within are typically the same across the board. You’ll find four main sections in each credit report, which are:
- Personally Identifiable Information (PII)
- Credit accounts
- Credit inquiries
- Public record and collections
Personally Identifiable Information (PII)
In the PII section of your credit report, you’ll find your name, address, date of birth, social security number, and employment history listed – essentially, all of the information that can be used to identify you.
While you’re reviewing this section of your credit report, be sure to double-check that the information listed is accurate. For example, if your address is misspelled or your social security number is a digit off, it’s crucial to dispute it with the bureau that provided the report immediately.
Lenders typically report on the accounts you have established with them every 30 – 45 days. When they report to the credit bureaus, your lenders will share:
- The types of accounts you have (credit card, mortgage, personal loan, etc.)
- The date the accounts were opened
- The credit limits or loan amounts
- The account balances
- Your payment history
The credit accounts section of your report significantly influences your FICO Scores calculation, so you’ll need to show positive credit behaviors to improve your overall credit. If you haven’t kept a watchful eye on your credit and are ready to improve, the first thing you should focus on is making on-time payments consistently.
According to Ted Rossman, an industry analyst at CreditCards.com, “As a rule of thumb, [by making on-time payments regularly] you could see an appreciable difference [in your score] in six months.” Even a 15 to 20-point increase could be the difference between being approved or denied for a financial product, so no improvement is too minor.
Again, you’re going to want to review this section closely and dispute any inaccuracies as soon as possible. To get started, run down the list we provided at the beginning of this section (types of accounts, dates opened, account balances, etc.) and ensure that the information in your records match the information listed in your reports.
Whenever you apply for a loan or line of credit, you authorize the lender to request a copy of your credit report. These requests appear on your credit report as “credit inquiries”.
In this section of your report, you’ll find a list of every organization that has accessed your credit report within the last 2 years.
There are two types of credit inquiries – hard and soft. We’ll share a brief overview of the differences here, but if you’d like to learn more, we’ve got detailed articles on the topic linked below:
- The Difference Between Soft and Hard Credit Inquiries
- How Does Obtaining a Best Egg Personal Loan Affect My Credit?
Hard inquiries generally occur after you apply for a loan or line of credit. More specifically, they occur when a lender pulls and reviews your credit report to determine if you qualify for their financial product.
Two important things to note here: Hard inquiries may influence your credit score, and they will be visible to lenders who look at your report. For these reasons, it’s wise to avoid making many hard inquiries within a short period of time. A high number of hard inquiries could be concerning to lenders – they may assume that you’re in financial trouble and could consider you a high-risk borrower.
Soft inquiries occur when you check your own report or when a lender checks your credit to pre-approve you for one of their products. If you’ve ever received promotional materials from a financial company saying, “You’re pre-approved for up to X!”, a soft inquiry likely played a role in that determination.
Unlike hard inquiries, soft inquiries will only be visible to you – lenders will not be able to see them on your report. Soft inquiries have no impact on your credit score, so don’t be too concerned if you come across a number of them on your report.
Public record and collections
In the public records section of your credit report, you’ll find any information credit bureaus have collected on you from local, state, and/or federal courts. Depending on where you live, the types of public records that could show up on your report include:
- Tax liens
If you’ve ever had overdue debts that were sent to collections, you can expect to find that information listed in this section as well.
How often should I check my report, and why?
While the credit bureaus are providing a great service to the people by offering credit reports weekly, in most cases, there’s no need to check your reports that frequently. Of course, there are always special circumstances where checking your reports once a week could be a smart financial move.
As a rule of thumb, you should check your reports monthly if you’re currently applying or preparing to apply for financial products. If you don’t plan on applying for credit anytime soon, you should be fine checking your report every 3 months.
So… why is it a good idea to check your reports semi-frequently? We’ll share a few reasons below.
Ensure your reports are accurate
Your credit scores are based on the information found within your credit reports. If there are inaccuracies in your reports, your credit score could be greatly impacted through no fault of your own.
By identifying and disputing inaccuracies when they appear, you can be certain lenders will see the most accurate scores and determine your creditworthiness accordingly.
Spot fraudulent activity early on
So, say you’re browsing the credit accounts section of your credit report when you come across a few accounts you’re certain you never opened. Uh-oh. This could be a sign of potential identity theft or fraud, so you’ll want to dispute these inaccuracies immediately.
Identity thieves can use your information to open new credit accounts in your name; when they don’t pay the bills, the delinquent accounts will be reported and listed on your credit report.
Leaving inaccurate information like this on your report can greatly impact your credit score. As well as your ability to obtain credit in the future, so be sure to keep a close eye out for any signs of fraudulent activity.
Have an idea of where you stand
Imagine you’re taking a look at a treasure map. The X is clearly marked on the map, but there’s no “you are here” indicator to be found. How will you find the way?
When you apply for financial products without an idea of what your credit situation looks like, it’s a lot like trying to find the X without knowing where you are.
When you know where you stand, you can determine which products you’re likely to get approved for and which you’ll be denied for. If your credit history isn’t the greatest, there’s no sense in applying for products made for borrowers with stellar credit. Not only is it a waste of time, but the hard inquiries caused by applying could also impact your credit score.
Similarly, if your credit is strong, don’t spend time applying for products designed for borrowers with poor credit. The better your credit, the better rates you’ll qualify for, so find a product that aligns with where you’re at. We’re pretty certain your wallet will thank you.
Considering applying for financial products but determined to raise your credit score first? Find a number of valuable, actionable tips in our article “6 Tips for Building Your Credit”