Credit is an important asset in today’s economy. Good credit can mean paying lower interest rates, landing the job of your dreams and buying the car or home you want, and knowing exactly what’s on your credit report can help prevent inaccurate or fraudulent information from damaging your score. Many people still have misconceptions about checking their own credit, however, and those misconceptions may keep people from keeping track of their own credit records. For example, many people believe they must pay for a copy of their credit reports, but the fact is that everyone is entitled to get a free annual credit report, according to federal law. Keep reading to learn more about checking your own credit, and why knowing what’s on your credit report is so important!
According to federal law, everyone is entitled to one free copy of all three credit reports each year (Experian, Transunion and Equifax), but there are other ways to get a copy of your credit report for free, as well. For instance, if you are denied credit, housing or a job because of information contained in your credit reports, the creditor must disclose which credit bureaus were used in making the decision, and you are entitled to a free copy of each report used. You are also entitled to a free copy of your reports if you are unemployed and looking for work, or if you receive government assistance, such as food stamps or other welfare benefits. Additionally, if you think you are a victim of identity theft of fraud, you are entitled to a free copy of your reports. And, contrary to popular belief, checking your own credit will not damage your credit score. While having a creditor or other third party pull your credit will result in a hard inquiry on your report (which can damage your score if you end up with too many inquiries), checking your own credit does not have the same effect. You will never be penalized for checking your own credit!
There are a few reasons you should take advantage of getting a free credit report every year, even if you aren’t currently trying to get new credit. For one, looking at your own credit is the best way to identify false or inaccurate information on your report, so you can take the steps needed to correct the information. Checking your own credit is also often the best way to find out if you’ve been a victim of identity theft, allowing you to protect yourself before things get worse. If you’re looking for work, trying to buy or rent a home, or plan to open a new line of credit for a major purchase, checking your own credit can alert you to potential problems, so you can work on fixing your credit before you apply, giving you the best chance at an approval and a lower interest rate (or getting the job you want). Just as you review your credit card or bank statements regularly, checking your own credit is the best way to maintain financial health and protect yourself against inaccurate or fraudulent information.
Perhaps the best reason to check your own credit, however, is that you can do so for free, so there’s really no reason not to! If you haven’t done so recently, be sure to get your free annual credit report today, so you can take the necessary steps to build or improve your credit!