Losing weight and improving your financial status are common New Year’s resolutions. Regarding the latter, make sure checking your credit report is the first thing on your list of resolutions, especially if you’re planning to buy or refinance your home, buy or lease a car or truck, or take out a major loan for personal or business reasons.
The U.S. Consumer Financial Protection Bureau (CFPB) this month is stressing the importance of monitoring your credit. Keep in mind, U.S. consumers are entitled to one free credit report from each of the three major credit reporting agencies, Equifax, Experian and TransUnion.
“If you review your credit report from one of the major companies every four months, you can get a good idea of your credit throughout the year at no cost,” writes the CFPB’s Erica Kritt. ” However, if you are planning to start the homebuying process within the next six months to a year, you may want to request and review all of them at once to check for errors or issues.”
Credit scores are not included with the free credit reports, but FICO scores, the most commonly used formula by lenders, is widely available for free by many credit card providers, including Chase, Citi, American Express and Discover.
You have the right to a free copy of your credit report once per year from each of the three companies at . You can also call 1-877-322-8228.
Review your credit report
As you probably know, credit reports often contain errors, and you have the right to challenge those errors. If they are verified, the credit bureaus are required to fix them. Incorrect lending or credit card information can appear on a report because the credit bureaus processed the data incorrectly or because lenders or debt collectors sent flawed information to the credit bureaus — or did not update the information they previously reported. Incorrect information may also be a result of fraud or identity theft, such as when thieves open credit card accounts in your name. You should review your credit report for any errors or fraudulent activity.
When you review your credit report, look for: incorrect first and last names; addresses of places where you did not live; and names of employers you did not work for.
Review each account listed on your credit report for the following:
- Accounts you don’t recognize
- Accounts that are listed twice
- Accounts that have been closed but are listed as still open
- Incorrect current balances
- Incorrect negative account information, such as late payments and missed payments
- Negative account information, such as late or missed payments, that is more than seven years old
The CFPB: “If you find errors or fraudulent activity after your review of your credit report, you have the right to dispute inaccurate or incomplete information. Keep in mind that there’s a difference between inaccurate or incomplete information and negative but accurate and complete information. Both can lower your credit score, but a credit reporting company will only correct information that is inaccurate or, incomplete, or outdated.”
The three major credit reporting companies provide instructions for filing a dispute online: , , and . The CFPB provides a sample dispute letter that you can use if you want to submit your dispute by mail.