Credit reports are designed to give you a clear picture of your financial health and creditworthiness. Sadly, not all credit reports are created equal. You don’t want to waste time or give yourself unnecessary financial stress by getting an incomplete or inaccurate report. Thus, it is important to get the best and most accurate credit reports each time you look at your credit history. Here are the top three tips for receiving the best credit reports:
Tip #1: Look where they’re checking
Your credit report needs to be a complete picture of your financial situation to be an effective financial planning tool. Many reports offer themselves up as complete but really only pull information from one credit bureau. This does you a disservice by forcing you to get multiple reports so that you can compare the data between them.
Your best bet for getting the best credit reports is to read the fine print carefully to track where information is being collected. In this way, you will know before you order the report which ratings agencies will be included. This can help you determine if the final information is correct or if you need to work on errors. The sources for the information on your credit report can also dictate the terms. If your local bank is behind on reporting loan payoffs, you will see a very different report that if all the institutions were up to date. Understanding the why and how of the information pulls on the report can help you avoid problems and confusion.
Tip #2: Evaluate costs
Credit reports are available for a number of fees, or you can get your credit report for free. There are advantages and disadvantages to both the fee and free reports. When you think about why you want the credit report, this can help you determine whether you will be more benefit out of paying for the report or if you can afford to get your reports for free.
Free credit reports are available from annualcreditreport.com, which is sponsored by the US government and the Federal Trade Commission. However, these reports do not include a credit score, and they only pull information from one credit bureau at a time. To get a view of your credit report information from all three bureaus free of charge, you have to visit the website again and request the report from another agency.
For a fee, you can have your credit report anytime or all the time. With credit monitoring services, you have the option to get ongoing access to your credit profile. These services are available through each of the major credit bureaus and also through consumer advocacy groups or your home financial institution. Some of these credit report providers also provide score tracking as a part of their services.
Tip #3: Keep on top of errors
Finally, to ensure that you are receiving the best credit reports, you need to keep on top of errors in your accounts. Anytime you receive a credit report and feel it has erroneous information, you need to move to have it corrected immediately. Incorrect information can distort your credit score or be an indication that your account has been compromised.
The numbers around errors on credit reports vary, depending who is doing the reporting and what their motivations are for the statistics. According to some, there are 52 million Americans who have errors in their credit reports, an astonishing one in seven. However, other sources say that only 2% of credit reports have mistaken.
Many items that you may view as erroneous are actually signs of identity theft. If you are seeing additional accounts in your name, large balances owed on cards you don’t use regularly, or a sudden spike in credit inquiries when you are not in the market for a loan, someone else may be using the account. You will want to investigate and report this as soon as possible, as most identity theft victims who catch the crime within the first five months incur no out of pocket fees. If you have been pulling your credit report regularly, you will be better able to spot errors and document that charges were not made by you.