One of the more frequent questions we receive from individuals we’re counseling or analyzing their credit report is, how often should I look at my credit report. It’s a great question, so we wanted to address it here, following the advice below can be helpful in many areas regarding your overall credit health.
When & How Often Should I Look At My Credit Report?
You Should Review Your Credit Report Yearly & Ahead Of These 10 Events
You should review your credit at least on an annual basis. Since 2004, all American adults have the right to view their credit reports from the three major consumer reporting agencies (Equifax, Experian and TransUnion) every twelve months. Consider the term, “annually,” your minimum.
You should also consider reviewing and analyzing your credit report well in advance of the following events:
1. Qualifying for a home mortgage
2. Financing a vehicle
3. Applying for a new job
4. Moving to a new apartment
5. Applying for a private student loan for yourself or a child/grandchild
6. Changing vehicle insurance companies
7. Requesting a new cell phone service plan (not pre-paid)
8. Asking for utility service in your name
9. Seeking a private life insurance policy
10. Adding certain investment activities such as buying on margin
In each of these cases, someone will look at your credit history or credit rating before either determining to approve your request or deciding upon how much to charge you in interest, fees or deposits.
Even if none of these events apply to your life at the moment, you should still review and analyze your credit report at the very least every twelve months, although more frequently is better.
The Fair and Accurate Credit Transactions (FACT) Act of 2003 gave you the right to pull your credit report every 12 months from three difference credit bureaus. As its purpose, FACT stated the importance of allowing consumers to ensure “confidentiality, accuracy, relevancy, and proper utilization” of their credit information. Consequently, your credit report analysis (done on your own or with a certified credit counselor) should address each of these purposes.
While you do not “own” your personal credit information (you give up ownership in the small print when applying for a loan), you are entitled to keeping your information confidential. You want potential lenders and others making decisions based upon your credit to have access to your information. However, you do not want your nosy cousin or loud-mouthed neighbor getting a hold of your credit history.
Only businesses and government agencies with a legitimate purpose for looking at your credit history can access it.
Still, you can minimize the access that others have to your credit history by submitting a request at OptOutPreScreen.com or by calling 888-5-Opt-Out (888-567-8688) to opt out of pre-screened credit card and insurance offers. This method opts you out for five years. You can fill out on online form to print and mail in order to opt out permanently. There is no fee for this service.
The bulk of most credit report review and analysis activity looks at the accuracy of your credit accounts, also referred to as your trade lines. As you look through your credit accounts, you particularly want to ensure that your payment history is accurate. Look for any listed late payments and confirm that you did indeed pay late. Then, look at the status of each trade line. It will typically show as open, closed or charged off (an accounting term for bad debt that the creditor does not believe it will ever collect).
If your report lists any such information inaccurately, or if it lists accounts that are not yours at all, you have the right to dispute the errors. The process is simple, though it can take a month or so in most cases.
Simply go to the home page of the Credit Reporting Agency (CRA) supplying the report within 30 days of pulling the report, and find the “Error Dispute” link. You will first need to supply the report or file number and may have to sign up to (or sign up for) your CRAs free account. The screen will then show your report, at which time you can click on the information you believe to be in error. For each item you dispute, you will choose the reason for the dispute from a dropdown list.
After submitting the dispute, the creditor reporting the information will have 30 days to respond. Otherwise, the dispute automatically settles in your favor.
Information on your credit report relates to accounts (original or in collections) you have opened. Additionally, your personal details include your name and aliases, your current and recent addresses, phone numbers you have used, and your current and/or former employers. While you find such information on your credit report and want it to be accurate, it does not relate to your credit worthiness or rating. Credit scores will use none of your identifying information when calculating your rating.
Still, if you see information from someone else (whether you know them, are related to them, or are complete strangers to them), use the same dispute option to remove it.
A credit report analysis should give you a good idea of who is viewing your credit report and for what purpose. Each credit report will contain two or three “Inquiries” sections, listing names and dates of all organizations accessing your credit in the past 24 months. Section titles vary by CRA.
The “Hard Inquiries” or “Active Inquiries” section lists all creditors to which you have applied for a loan or line of credit, regardless of whether they approved you. Only you and those potential creditors to whom you apply for a loan can see the hard inquiries. These inquiries may have a very small negative effect on your credit, if at all, for up to 12 months.
The “Soft,” “Passive,” “Account Review” or “Promotional” inquiries list all other organizations accessing your credit history. Many include current financial or insurance companies you have accounts with who want to review your current credit history to determine how to manage your account. Others involve potential creditors and insurance companies who essentially purchase contact lists from the credit bureaus in order to send offers by mail. These inquiries have absolutely no effect on your credit rating.
When you foresee a major credit event in your future, be it a change in insurance, a move to a new home or a loan application, make sure to pull and analyze your credit in order to clean and polish it up for making the best credit impression possible on the decision maker.
If you have additional questions please give us a call and we’ll be happy to help! You can also visit the most frequently asked questions about our credit report analysis service for further details.