Stay on Top of Your Credit Reports With AnnualCreditReport.com

In early September, Equifax announced it had experienced a data breach affecting 143 million Americans. The breach took place between mid-May and July and was discovered by the company on July 29.

You might be wondering: what is Equifax, and why should this matter to me?

Equifax is one of three big credit-reporting companies. The other two are Experian and TransUnion. These companies generate credit reports that are used by lenders and others to determine if you are a good credit risk. Whether you know it or not, you are a customer of these companies, because they all compile data about you from credit card companies, lenders, banks, retailers and others, as well as from public records.

For guidance on what to do in the wake of the Equifax breach, here are 5 Steps You Should Take To Protect Yourself after Massive Equifax Attack from Forbes and guidance from the Washington Post on how to freeze your credit to protect your identity.

Big picture, this data breach ups the stakes on why it’s important to review your credit reports regularly for errors and signs of fraud.

How Common are Credit Report Errors?

A recent FDIC study on credit report accuracy found that one in five consumers had an error on at least one of their three credit reports.

Worse yet, 5 percent of consumers had errors on one of their three major credit reports that could lead to them paying more for products such as auto loans and insurance. That’s one in 20 consumers – or about 12 million American adults – with potentially costly errors.

In the same study, one in four consumers identified errors on their credit reports that might affect their credit scores, and slightly more than one in 10 consumers saw a change in their credit score after getting errors corrected.

Clearly, the odds are pretty good that your credit reports will include errors at some point. If you don’t know about those mistakes, you can’t get them fixed. And when it comes to credit reports, what you don’t know really can hurt you.

Protect Your Financial Future

You might think of your credit reports as being similar to your Electronic Medical Record (EMR). Today’s EMRs are a great advancement for medicine, putting your your full medical history at the fingertips of medical professionals.

An error in your EMR might not seem like a big deal, until you’re unconscious in the emergency room and a doctor is making decisions based on that record. Is your allergy to certain medications missing from your EMR? Is there an inaccurate or erroneous diagnosis on your record? In a high-stakes situation, you want the professionals looking at your EMR to have accurate information.

Credit reports may not be life or death, but they are indicative of your financial health, and financial professionals rely on them – and the credit scores they are used to generate – to make decisions that could have a huge impact on your long-term plans and dreams. You might end up paying thousands more in interest. You might miss out on deals that could save you money. Or you might even be denied a loan and have your plans derailed.

Make sure your credit reports are accurate when the stakes are low, so that when the stakes are high, your financial history will work in your favor!

Getting Your Credit Reports is Easy – and Free

You need to keep an eye on all three credit reports — Equifax, Experian and TransUnion — since an error on just one of your reports could end up costing you more or even stand in the way or achieving your financial goals and dreams. Married? You and your partner still have individual credit reports, so you need to review all three reports for both or you.

By law, you are entitled to a free copy of each of your credit reports once a year. You can request your reports at AnnualCreditReport.com.

You may also request reports directly from the three credit bureaus. However, the government -mandated Annual Credit Report site provides a centralized way to manage your requests. In addition, the site is packed with helpful consumer information – and it won’t try to sell you additional products and services.

Some credit card providers and banks also offer free credit reports from one or more of the credit bureaus. If this is a perk that comes with one of your credit cards or accounts, take advantage of it.

Looking for Errors

As you look over your credit reports, be especially alert to errors that may be signs of fraud. This includes accounts that you did not open, unfamiliar addresses associated with your name, and credit inquiries you don’t recognize, which can indicate that someone has tried to open new accounts using your name.  

If you have been the victim of identity theft, ask one of the one of the credit reporting companies to put a fraud alert on your credit report. They are required to tell the other two companies. A fraud alert doesn’t prevent a lender from opening credit in your name, but it does require a lender to take measures to verify your identity first. The alert lasts 90 days, but you can renew it. For more information, see this guide from the FTC on how to set up and manage a fraud alert.

A stronger measure is to put a security freeze on your credit reports, which generally prevents new credit from being opened in your name. In most states, you can file a security freeze for less than $10, and if you are an identity theft victim, you typically can place a freeze for free.

In addition to looking for fraudulent information, you want to be on the lookout for a wide range of mistakes that can result from inaccurate reporting and data mix-ups.  

Here’s a list from the Consumer Financial Protection Bureau (CFPB) of common errors to look for:

  • Errors made to your identity information (wrong name, phone number, address).
  • Accounts belonging to another person with the same or a similar name as yours (this mixing of two consumers’ information in a single file is called a mixed file).
  • Closed accounts reported as open.
  • You are reported as the owner of the account, when you are actually just an authorized user.
  • Accounts that are incorrectly reported as late or delinquent.
  • Incorrect date of last payment, date opened, or date of first delinquency.
  • Same debt listed more than once (possibly with different names)
  • Reinsertion of incorrect information after it was corrected.
  • Accounts that appear multiple times with different creditors listed (especially in the case of delinquent accounts or accounts in collections).
  • Accounts with an incorrect current balance.
  • Accounts with an incorrect credit limit.

For some errors, alerting the credit reporting agency may be sufficient. For others, you may need to file a dispute with the agency and the information provider. Both the credit reporting agency and the company or organization providing information about you are responsible for correcting inaccurate or incomplete information in your report.

For more information, see this detailed CFPB guide on how to handle disputes.

This is where you can’t drop the ball. Spotting errors is the easy part. You have to be diligent about getting those errors fixed. You are entitled to another free copy of your credit report after a disputed item has been modified, so you can verify that the information is correct.

Don’t Get Complacent

Your credit reports are active documents that include constantly updated information, including payment histories, how much you currently owe, and recent credit inquiries – all items that directly affect your credit score.

Unfortunately, this constant updating means that new errors can always creep in. Once you’ve established that all your reports are accurate and taken steps to correct any errors, be sure that reviewing your reports becomes part of your financial routine.

For most people, a yearly review should be sufficient. However, since you can request free reports from all three bureaus once a year, a smart strategy is to stagger your requests. That way you can plan to review one of your three reports every four months.

If you have free access to credit reports through a bank or credit card provider, that can give you an opportunity to review some reports more frequently. You’re also entitled to a free report if a company takes adverse action against you, such as denying your application for credit, insurance, or employment, based on information in your report. You must ask for your report within 60 days of receiving notice of the action.

There’s rarely any reason to pay for a credit report, although many companies (including the credit reporting agencies) will try to sell you reports and monitoring services. Unless you are dealing with a really distinctive situation, don’t waste your money. Stick with AnnualCreditReport.com and other free options.

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