Manage your credit health

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Like all things in life, your credit also needs regular attention and maintenance. Before you shop for a new car or house, or apply for any new loan, you should know your credit history and your numbers.  Getting a handle on this information ahead of time gives you the opportunity to verify the information on your credit report is correct and fix errors if there are any.  Being proactive with your credit allows you time to improve your credit score so you get the most favorable options possible. Here’s some helpful information on how to get your free credit report, and what to do if you find any errors.

Why is it important to check your credit report?

Staying on top of your credit is important for a number of reasons:

  • Good credit offers you more favorable interest rates and terms
  • Unfamiliar accounts or purchases could be a sign of identity theft, which can impact your financial  health if left unaddressed
  • Errors on your credit report can delay your credit or loan approval
  • Some prospective employers check your credit before extending a job offer

How to check your credit report

You are entitled to a free credit report (does not include your credit score) from each of the three credit reporting agencies every 12 months thanks to the Fair Credit Reporting Act.  Visit www.annualcreditreport.com to request a free copy of your credit report. Your credit score is comprised of different information including payment history, length of time your accounts have been open, types of credit in use, and how much you owe.  See what else goes into your credit score at MyFico.

How to dispute errors on your credit report

If you see an error on your credit report you need to file a dispute to get it removed, which can help increase your credit score. When the credit reporting agency receives your dispute, it can take a month or longer in some cases to investigate and respond, which is why you are urged to start the process before you apply for a loan or credit. There are three main credit reporting agencies that maintain records of your credit.  Lenders will generally want to check your credit report when you apply for credit and will also want to know your score.  The most widely used credit scores come from the Fair Isaac Corporation (FICO), which is where the term "FICO Credit Score" originates. Following is the contact information for each credit reporting agency:  

 

1. Transunion

  • Phone: 800-888-4213, click here for information about filing a dispute online with Transunion.

2. Experian

  • Phone: 888-397-3742, click here to file a dispute online with Experian.

3. Equifax

  • Phone: 800-685-1111, click here for credit report assistance from Equifax, including online disputes, freezes and fraud alerts.

 

Common mistakes

  • Inaccurate information about another person with a similar name but different social security number
  • Accounts in your name that you didn’t sign up for, or accounts that you closed that state they are open
  • Inaccurate late or delinquent payments on accounts you paid on time
  • Incorrect balance amounts on account

Click here to read more about common credit report mistakes from the Consumer Financial Protection Bureau.

A good rule of thumb is to pay all of your credit debt on time and watch out for your debt to credit limit ratio, which is calculated by how much of your credit limit you use.  For example, if your credit limit is $1,000 and you are using $500 of that available limit, you would be using half of your credit, giving you a 50% debt to credit ratio. This article explains more. 

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General Disclosures

The opinions and views in this blog post are those of the authors, and are not intended to provide specific advice or recommendations for any individual. Please consult professional advisors with regard to your individual situation.