Everything You Need to Know About Your Free Credit Report

Just like you need a key to unlock a door, a good credit score is the way to access the financial world. Understanding your credit can be challenging, and the effect of paying your bills and debts on time might not be noticeable in daily life. However, your credit history is crucial when applying for loans, credit cards, and even a new job. In other words, it can make or break your efforts to apply for a mortgage, open a line of credit, or switch careers.

Fortunately, your credit report is at your fingertips for free every year. These reports summarize your financial trustworthiness, influencing essential aspects of life, from loan approvals to rental agreements. As a result, it’s recommended that you check your credit every year to understand and improve your financial well-being. Here’s how to get your hands on the credit reports you’re entitled to, avoid scammers trying to charge you to access your financial information, and interpret your reports.
 

  

How to get a free credit report

Federal law allows you to receive your credit report every year without cost. Here’s how to get your free credit report and use it to strengthen your financial circumstances.

Step 1: Request a copy of your free credit report

First, it’s crucial to understand that there are three major credit bureaus in the United States constantly compiling data on consumer activity: TransUnion, Experian, and Equifax. These institutions create separate credit reports; together, the 3 reports create a full picture of your borrowing activity. Additionally, they use the reports to assign you a credit score, a 3-digit number corresponding to your financial track record.

You can access your free credit report through AnnualCreditReport.com. This centralized website makes it convenient to request credit reports in one place. You can request them in the following ways: 

• Online at AnnualCreditReport.com
• By phone at 877-322-8228
• By mailing in the Annual Credit Report Request form to the following address:

Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281

Your credit card company may also provide credit report services. For instance, Capital One customers can access their TransUnion report (also known as a CreditWise report) by logging in to their credit card account. Similarly, Discover provides its customers with a free FICO credit score (a kind of composite credit score) update every month.
 

 

Step 2: Carefully review your credit report

When reviewing your credit report, it’s crucial to examine several key sections to ensure accuracy and detect any signs of potential issues. Here’s what to review on your credit report:

Personal information

Check that your name, address, Social Security number, past and current employers, and spouse’s name are accurate. Any unfamiliar names or accounts could indicate identity theft or reporting inaccuracies that need to be corrected.

Credit inquiries

Review the section listing inquiries made into your credit report. Credit inquiries from lenders occur when you apply for new credit, try to rent an apartment, or check your own credit.

Inquiries come in 2 categories: hard and soft. A soft inquiry doesn’t affect your credit score and can occur without your awareness or approval (such as a credit card company preapproving you for an account and sending an offer through the mail). So, it's typical to see soft inquiries from companies you don’t recognize, and these items won’t hurt your credit.

On the other hand, a hard inquiry comes from lenders and companies that receive an application for a new account. Usually, this only occurs when you deliberately apply for a loan or a financial account.

So, if you see any hard inquiries with companies you don’t recognize, it could mean that an identity thief is using your information to try to open new financial accounts. You should report this suspicious activity to the lender on the report and the credit bureau that provided the report.

Bill payment history

Examine the payment history for each account listed on your credit report. Check that the reported payment dates, amounts, and status (e.g., “paid as agreed,” “late payment,” “charge-off”) are accurate. Remember, closed accounts can linger on your reports for up to 10 years. Identify any missed or late payments and confirm that they’re correct. Discrepancies could affect your credit score and financial reputation.

Current debts

Review the accounts listed under your current debts. Verify the accuracy of the listed accounts, including credit cards, loans, mortgages, and other lines of credit. Confirm that the reported balances and credit limits are correct. Any discrepancies could impact your credit utilization ratio, a significant factor in your credit score calculation.

Bankruptcy history

Check the section detailing any bankruptcy history as well. Confirm the accuracy of the bankruptcy information, including the type (chapter 7 bankruptcy, chapter 13 bankruptcy), filing date, discharge date, and current status. Chapter 7 bankruptcy will fall off your credit report 10 years after filing, while chapter 13 bankruptcy goes away 7 years after filing.
 

 

Step 3: Monitor your credit regularly

Regularly checking your credit report is crucial for several reasons:

1. Identity Theft Detection

Regularly reviewing your credit report allows you to spot any unauthorized activity or accounts opened under your name. Identity theft is a prevalent issue, and monitoring your credit report can help you catch fraudulent activity early.

2. Accuracy Verification

By checking your credit report annually, you can ensure that the information presented (such as a late payment) is accurate. You can dispute errors and have them corrected promptly, preventing a drop in your credit score.

3. Credit Score Maintenance

Lenders, landlords, and potential employers may use your credit score to assess your financial reliability. Regularly monitoring your credit report allows you to identify areas for improvement and take steps to maintain or improve your credit score.

4. Financial Awareness

Monitoring your credit report provides insight into your financial health. It lets you see all your open accounts, outstanding debts, and payment history in one place. This information can help you make informed decisions about your finances, such as paying off debts or closing old accounts.

How to get additional free credit reports

While checking your credit report once annually is beneficial, you may need to review your credit more frequently if you make multiple significant decisions throughout the year (such as buying a home, applying for a loan, or moving into an apartment). Here are ways to view your credit reports throughout the year without paying:

• According to federal law, receiving a loan or rental application denial entitles you to a free report from the credit reporting company the lender or landlord used to view your financial profile. You must request the report within 60 days of getting the notice. This law also applies to insurance applications and changes in government benefits.
• You need to dispute fraudulent credit activity. The credit bureaus and the specific company that received a fraudulent application can both provide the credit reports.
• You are unemployed and will apply for a job within 60 days of requesting the report.
• You currently receive governmental assistance (such as an EBT card).
• You create a free profile on any or all of the three credit bureaus' websites and access the daily, weekly, or monthly reports. Credit bureaus usually offer free access to credit reports through their websites. For example, by registering for a free account on Experian’s site, you can access your Experian report and receive monthly updates. The platform also offers fraud alerts and a dispute process for correcting errors.
• Your state mandates free credit reports for residents.