One of the first things you want to do prior to applying for credit or a loan is to evaluate your credit report. Most consumers can request a copy of their report for free if it hasn’t been ordered within the past year. The main reason for having this initial review is to determine the safeguard and accuracy of the report. Most of us don’t like surprises and we want to be able to detect any inaccuracies in the report ourselves before they are brought to our attention by a mortgage officer or car dealership.
It is estimated over 75% of credit reports have incorrect or misleading information. We can dispute these discrepancies to have them removed but keep in mind it can be a time-consuming process.
With the constant increase of fraud and identity theft, it is a good idea to periodically review your credit report at least 3 or 4 times a year.
One small mistake on a credit report will not only affect your FICO score in a negative manner but will also affect terms of a loan, interest rate and down payment from the source you are applying for a loan. Insurance companies might deny coverage and you might not be hired for a job you’re applying for, all based on your credit history.
Keep in mind almost every possible company from retailers to finance companies law firms might want to review your credit history. This is legal as long as they get your permission beforehand.
There are three major credit bureau agencies, Experian, Equifax and Transunion. Since all three are separate entities, they in turn will also have different credit history on an individual. It is important to be sure to check all three when verifying the information on the reports are accurate.
Since we should review our credit 3 or 4 times a year, it might be wise to hire a credit monitoring service. These types of services will monitor your credit reports automatically and notify you with any changes that might occur. These services are usually offered at a nominal fee.
You as the consumer are responsible for the information provided on your credit report. There is also an advantage for disputing incorrect information in your credit report in a timely manner. The quicker you take the steps necessary to report erroneous information, usually the quicker you can get the information corrected.