Annual credit reports are one of those personal finance phrases that get thrown around a lot in casual conversation. You might hear it referenced when talking about credit cards, or buying a home. But what actually compromises a credit report? How does it affect your money? How often should you get a credit report?
Let’s start at the beginning: what is a credit report? A credit report is a compilation of your credit usage and most current credit situation. That means it’s a report that contains how many lines of credit you currently have open, and the payment history you’ve made on past lines of credit.
Lines of credit include things like credit cards, student loans, auto loans, mortgages, or other types of credit. They include bankruptcies, liens, and foreclosures. Reports also have personal information, like your birthday and social security number. Reports are written by credit bureaus. They collect and store financial data about you that they get from banks, credit card companies, and other financial companies.
Your credit report is important to your financial situation because it’s what lenders use to decide if they’ll give you additional lines of credit. When you apply for a new credit card, for example, that company checks your credit report to determine if they want to give you that card, and what your interest rate will be. Your credit report is used to determine your credit score.
In recent years, people like landlords and employers have also made credit reports part of their application process. So, your credit report can not only impact your money but where you live and your chances of getting a job.
The good news is that everyone is eligible for a free annual credit report. In fact, you have access to three free annual credit reports- one from each of the nationwide credit bureaus. Those are Experian, TransUnion, and Equifax.
You don’t have to order all three reports at the same time. You can spread them out over the course of the year. This is a good idea since it allows you to monitor your report throughout the year. Credit reports sometimes have mistakes on them. If you find a mistake, you’ll want to correct is ASAP, so that your credit score doesn’t suffer.
You can order online from annualcreditreport.com, or call 1-877-322-8228. To get your report you will need to provide your name, address, social security number, and date of birth to verify your identity.
It’s important to take advantage of your free annual credit report opportunities. Checking your annual credit report means that you have the control. You can challenge any errors, see what you’re doing well and where you can improve.
Kara Perez is the original founder of From Frugal To Free. She is a money expert, speaker and founder of Bravely Go, a feminist financial education company. Her work has been featured on NPR, Business Insider, Forbes, and Elite Daily.