subject: Free Annual Credit Report - 3 Reasons to Get One [print this page] Free Annual Credit Report - 3 Reasons to Get One
Managing your credit history is a very important step in creating wealth in your life. A good bit of it is based on handling your money and credit correctly. The other part though is how it gets reported as well.
Every person in the US has a credit history. For some people it is blank. They don't have a record yet of how they handle history. For some people it could fill a large volume of encyclopedias. Now the question becomes is your credit history accurate?
The US government requires the major credit bureaus to provide a copy of your credit history for free once a year. That is why you will often hear people talk about the free annual credit report.
It isn't the same as your credit score though. It is important to realize that your credit score is still tough to determine as each company calculates them differently.
The three major credit bureaus are Experian, Equifax and Transunion. Think of them as giant record keepers. They get reports from credit card companies, auto loans, mortgage loans, and other areas. Not every company reports to all three. Some will only report your information to one or two of them.
There are three main reasons to get a copy of your free annual credit report. We will discuss each of them in more detail below.
1) Inaccuracies
2) Identify Theft
3) Forgotten Credit Lines
Inaccuracies can riddle your credit report. The systems involved in collecting this information is not perfect. It is very possible that information is reported to the company incorrectly. For example your credit card company can report that you had a card be placed into collections. It can happen from an employee mistyping information into a computer program.
It is also possible that someone else's credit is being sent under your identity. I have a friend whose name is the same as her sister in law. They share first and last names but have different middle names. When she went to apply for a loan on a home, they were very confused by her credit history. They lived in different states, had different jobs, and different financial histories. The credit bureaus had mixed them up in places.
It took a while to get everything corrected so she could purchase her home. Getting a copy will allow you to find these errors quickly and get them corrected.
Identify Theft is a growing problem in the world. Getting a copy of your credit history can allow you to find out if someone has stolen your personal information. The credit bureaus will show any credit that is opened in your name. By checking it on a regular basis you can prevent this. You can also request that they put a freeze on your credit. This prevents anyone from opening credit in your name. Just remember to take it off when you get ready to apply for credit.
Forgotten credit lines may not sound like a big deal but they can be. It is not a good idea to have credit lines floating around. I found a couple of store credit cards on my report that I had completely forgotten about. I had gotten them when I was much younger and establishing my credit.
I kept the credit lines but requested that they be frozen. I didn't want to remove them as they would impact my credit score. I also didn't want to leave them laying around in case someone got the information and started using them.
