In Focus – SCCCU Blog

If you don’t know how to read a credit report or don’t know your credit score, raise your hand. First, the good news is that you’re not alone. According to a recent study from BadCredit.org, more than 30% of Americans have no idea what their credit score is. Next, the not-so-good news: being in the dark about your credit history can have serious financial ramifications, as errors on your credit report could lower your credit score, or worse, you could be a victim of identity theft and not even realize it. Read on for details on how (and why) you should review your credit report regularly.

A Little Number That’s a Big Deal
Your credit score is more than just a number. “All kinds of decisions are made about you based on your credit score,” says Lisa Gill, an expert in credit scores and reports for Consumer Reports. “Some of them are obvious, like if you apply for a credit card, or you want to get a loan for a car, or a loan to buy a house, or even a loan to go to school, or a personal loan for any reason.”

Beyond that, your credit score is used for many other things, including getting a company to supply you with utilities, helping a landlord decide whether he or she will rent to you, or even whether an employer hires you. It can even affect how much you pay for things like homeowners or car insurance.

Your credit score will range from 300 to 850. The higher the score, the better, as it will give you more access to various credit products and lower interest rates. For now, we will stick to how to reach a credit report. If you want details on calculating your credit score, click here.

How To Get Your Credit Report
Getting your credit report is very easy and free. First, you’ll want to go to AnnualCreditReport.com [link to this site]. While many sites will try to get you to pay for a credit report, you shouldn’t do that. AnnualCreditReport.com is the only source for free credit reports authorized by federal law. On the site, you can access reports from three of the largest credit bureaus in the U.S., including Equifax, Experian, and Transunion, at no cost.

While on the site, you’ll be asked to follow the below steps:

1. Fill out a form with your personal information. Please note that you will have to enter your Social Security Number.
2. Select which reports you want. We recommend getting reports from all three credit bureaus.
3. Answer a few more security questions for each credit report. These questions are meant to be more complex, and you may even need to access your records to answer them. If you run into trouble, you can call the credit bureau directly to have the report mailed to you.
4. You’ll then have access to your reports. From there, you can save or print them to review later.

You’ve Got Your Reports, Now What?
Now that you have your reports, you should take your time to review them for accuracy. “Some incorrect information can harm your credit rating or be linked to serious matters like identity theft,” warns Bruce McClary of the National Foundation for Credit Counseling. As you review your credit report, pay special attention to the following:

• Ensure your full name and Social Security Number are correct.
• Review the addresses listed for accuracy (every address where you’ve lived does not need to be listed). Make sure that there aren’t any addresses where you never lived – that should be a case of someone trying to use your information to obtain credit.
• Double-check the list of bank accounts and credit cards to ensure everything is correct.
• Review your list of loans and make sure they are yours. Then, look specifically at any late payments mentioned that aren’t accurate.
• Look to see if there is anything in collections. For example, it might be an old utility bill from an apartment you lived in 10 years ago that you forgot about. It doesn’t matter whether the bill is $25 or $2,500. If it is in collections, it can drag your credit score down. Contact the collections agency listed on the report for more details if you see something you don’t recognize. When you reach out, ask that the debt be validated (this will give you some time to sort things out).

What to Do If You Find an Error
Going through your credit report, you might find inaccuracies. If you do find something amiss, do the following:

1. Prepare a letter explaining the situation to the credit bureau where the error appears. You’ll also want to make copies of supporting documentation, such as a copy of your checking account statement showing the payment (just be sure to black out any sensitive information).
2. Send the letter and supporting documentation by registered mail. Once delivered, the credit bureau will have 30 days to respond (but will typically get back to you within ten days).

You should also inform your financial institution of any error reflected in your account. That way, they can provide the protection you may need moving forward.

If the credit bureau responds and says it won’t correct the error on your report, you can try again. If you get to this point, Gill advises finding different evidence and preparing a new letter. If a second letter and additional supporting documentation don’t work, you must take it to the next level. “Your next step is to go to the Consumer Financial Protection Bureau (CFPB), a government agency that takes consumer complaints,” Gill explains. With the CFPB, you can file your complaint online, and they have 30 days to respond.

If the CFPB cannot resolve the issue, and you still feel you’re right, you have the right to sue under federal law. According to Gill, many attorneys specialize in this, and it’s not as expensive as you might think. “If you have a legitimate claim and it’s ruled in your favor, the company will have to cover your legal costs,” she adds.

The Bottom Line
Now that you know how to read a credit report, you should make it a regular part of your financial wellness routine. “Once a month is recommended as a standard practice, mostly because it allows you to react quickly to any errors that may appear,” says McClary. “Fast action is critical when someone else is using your personal information to open or access lines of credit.”