I was recently in a great GRI class on Finance and during part of the discussion, the topic of credit reports and credit reporting came up. I was surprised that many people didn’t know some of the things I mentioned — so I thought “well, if these smart, knowledgeable people don’t know it — maybe other people don’t either”. So here it is:
Ignore those stupid advertisements that you see. No one has the money or desire to run expensive TV ads to give you a “free credit report” unless there is a way for them to make money from it. Advertising is not free. There is, however, a real way to get a genuinely free copy of your credit report. The federal government made the credit reporting companies do this years ago.
Go to AnnualCreditReport.com. Nothing else. That site is genuinely free. The big three credit companies (Equifax, Experian and TransUnion) will give you a free credit report once a year each if you access them through this site. Now they can charge you for the credit score and you can pay if you want, but at least at first, I would say “don’t do it”. Just do the free thing.
Pro tip: don’t order all three reports at the same time. Each company has to give you one free report a year. Order one every 4 months. For example, order TransUnion’s report on January 1, order Experian’s on May 1 and order Equifax’s on September 1. Then next year, do it again. That way, you are getting your legally allowed report from each once a year, but really getting one every four months.
Don’t worry about or pay for the credit score (FICO score). Just make sure that the report is correct. If there is anything on there that is not yours, or is inaccurate or is really old (like more than 7 years old), dispute the report to get it fixed. Each of the companies has a way of disputing inaccuracies on the report and its not difficult. Now, be fair to the companies and only dispute things that are old, inaccurate or wrong. Don’t try stupid stuff like disputing everything or other things that waste everyone’s time. Just try to get your report to be accurate and the credit score will take care of itself.
The reason for getting one report every four month (as detailed in the Pro tip above) is that correcting an inaccuracy on one report will probably fix it on the other two. The hope is that by the time you are working on credit report number 3 on the first round, there won’t be much to get fixed. By fixing the other two earlier in the year, number 3 will probably be pretty accurate.
Don’t just do this once. Once you have the inaccuracies corrected (which will probably take the entire first round of reports — one year), continue on the schedule of one report every 4 months. Its just smart to keep an eye on the report and make sure no inaccuracies creep in. Toss the credit reporting companies a bone and buy a score from each one of them every few years. Don’t sign up for one of those “credit monitoring services” since by following the recommendations in this post, you are being your own credit monitoring service.