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Credit reports don’t exactly make for exciting reading. But regularly reviewing this key document is a must-do.
A credit report is a record of your credit history, collected by credit reporting companies like Equifax, Experian, and TransUnion. Banks, prospective employers, utilities, and other entities can look at it to make decisions like whether you’re offered a credit card or can rent your dream apartment. It’s also the basis for your credit score, which lenders use to assess your creditworthiness to approve loans and set interest rates.
In a perfect world, people who pay their bills on time and go easy on their credit card balances wouldn’t need to worry about the information in their credit reports. Unfortunately, it doesn’t always work that way. Even if you’re totally on top of your money, your credit report can include problems ranging from innocent clerical errors to fraud and identity theft.
Most of us are fairly unaware what’s in our reports. A 2018 Consumer Federation of America survey found that although two-thirds of consumers agree that it’s important to check your credit report, only 36 percent had done so.
Here’s how to ensure your credit report reflects who you really are.
You can access your reports from each of the three big credit reporting companies at AnnualCreditReport.com. There are also sites including CreditKarma and WalletHub that offer free access to a credit report.
You’ll have to provide your Social Security number and answer some questions to confirm your identity.
Check your credit report at least once every year, says Rod Griffin, director of public education at Experian. It’s a critical first step in verifying your report’s accuracy.
“Annual monitoring helps you stay aware of where you stand, should you need to apply for a loan, mortgage, or other credit,” he says.
Under federal law, you’re entitled to one free copy every 12 months directly from each of the big credit reporting companies. Certain situations, such as if you have been denied credit due to information on your report or have been a victim of identity theft, may entitle you to additional free looks. (Monitoring sites and services often let users check as often as they want.)
You should also check your report if you’ve experienced some warning signs that criminals have targeted you for fraud or identity theft.
“An abrupt absence of household paper bills can suggest one’s mailing address has been changed by thieves,” Griffin says. “Rejection or high interest rates for new lines of credit can mean multiple illegal inquiries, and unauthorized transactions and purchases almost certainly prove a stolen identity.”
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Mainly, you’re looking for incorrect information, which could be an error or potential fraud.
Two common indicators of fraudulent activity are accounts you don’t recognize and credit cards you never applied for, says Mike Tanenbaum, executive vice president and head of Chubb Cyber North America.
“In addition to unfamiliar accounts, you should be wary of unusual inquiries from companies that you don’t recognize or any new personal address changes,” Tanenbaum says. “These items may be a sign that you are the victim of identity theft.”
If something seems off, say something. Financial institutions have been known to make mistakes, and the sooner you spot them, the better. The same goes for fighting fraud.
“If you see accounts being reported that don’t belong to you, interact with the credit bureau’s dispute process,” says Tom Quinn, vice president of scores at FICO.
Consumer advocates often recommend freezing your credit as protection against certain types of fraud and identity theft. This free move prevents lenders from issuing new lines of credit in your name, thereby stopping potential fraudsters in their tracks. (The catch: You won’t be able to obtain new credit, either, unless you take moves to temporarily lift the freeze.)
“Contact each of the credit bureaus―Equifax, Experian, and TransUnion―to request a credit freeze,” says Quinn. “You will then go through a process to verify your identity and get a PIN that you can use to unfreeze and refreeze your credit report as needed.”
While freezing your credit report can be an effective defense against criminal activity, it’s not a cure-all. There are other ways for criminals to do damage with personal data obtained in a hack or data breach.
“You must remain vigilant and continue to carefully check your financial statements and records,” says Tanenbaum.
Griffin suggests a few more measures to tighten up security, such as enabling two-factor authentication on accounts with financial data. That level of protection boils down to using both something you know (a password) and something you have (a unique code sent to your phone or email) to successfully log into an account.
He also recommends saving financial tasks for home instead of public spaces. You never know who’s looking over your shoulder, or jumping on the shared computer after you.
“Be more discerning about how you access your data online, by avoiding the use of public Wi-Fi networks to check important email or to log in to online banking sites,” he says. “Be more proactive in reducing risk.”