Why do I need to check my credit report?
There are two primary reasons to check your credit report. One is to ensure the accuracy of information and the other to monitor your credit reports to prevent identity theft.
As a refresher, there are three major credit bureaus (Experian, TransUnion, and Equifax) that collect information about how you borrow and repay money. I wrote an information paper on Understanding Credit and Credit Reports for more information about credit reports.
The accuracy of information is important as it impacts our ability to obtain new loans and the rate we are charged for those loans. There is only one true source authorized by federal law to get your credit report. It is AnnualCreditReport.com. By federal law, you are entitled to a free copy of your credit report once a year from each of the three major credit reports. Some states may have additional expectations, like Maryland which allows for an additional free copy from each of the credit bureaus.
Ever since the pandemic, credit bureaus have allowed individuals to get a free copy each week, but the ending date for that continues to change. The Consumer Financial Protection Bureau developed a nice tool / checklist to assist you in reviewing your credit report.
The Federal Trade Commission reports 5.7 million cases of fraud and identity theft. Checking your credit report periodically can serve as a form of identity protection. The credit report contains a list of all active accounts reported to the credit bureau. You should make sure every account listed is an account that you opened.
If you don’t plan on opening a line of credit any time soon, I suggest you freeze your accounts. This prevents someone from accessing the information in your credit report. Experian has good information about freezing your account. Remember you need to freeze the account with each credit bureau. And don’t worry, you can unfreeze or thaw your account at any time.If you become a victim of identity theft, FDC developed a website to guide you through the reporting and recovery process.