Understanding Credit

Learn How To Get Your 3 Credit Reports For Free

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If you have ever applied for a loan or a credit card, you are probably aware of the importance of your credit report and credit score. The information a credit report contains tells lenders whether you are a “credit risk” or not. It can also determine what interest rates you will be offered and other important things like whether or not a property owner will rent their apartment to you.

Have you ever thought about obtaining a yearly credit report online? If you are not currently involved in obtaining a loan or a credit card, you probably have not thought about your credit report lately. However, just as a yearly medical exam is crucial to your physical health, an annual credit report check is vital to maintaining good financial health.

About Credit Reports –

A credit report can be described as a consumer’s financial reputation or history. The credit report contains information such as the consumer’s current address and previous addresses, along with a list of all of their current and past creditors.

The reports are generated by three major agencies: TransUnionEquifax, and Experian. Contrary to popular belief, the scores that each agency reports for a consumer can vary. However, while it’s important for consumers to check their scores for variations between the three agencies, they should also rest assured that the scores will be within a reasonable range of each other. For example, if one agency reports a consumer’s score is 700, the different agencies won’t report a score of 600. All scores will usually be within a reasonable range of each other, saving a difference of 20-40 points.

It’s crucial to order credit reports at least once a year, and in fact, credit bureaus will allow consumers to request one free report on an annual basis. Reports can be ordered online, by telephone, or via mail.

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Why Should You Get Your 3 Credit Reports?

1) A yearly credit report lets you see what is going on with your finances. It also alerts you to problems of which you may not be aware. Under federal law, you’re entitled to a copy of your credit report once annually from all three major credit reporting agencies. Everyone should check their credit reports from each of the three credit bureaus at least once annually, if not more. Doing so will make sure your credit is up-to-date and accurate. Each reporting agency collects and records information in different ways, and may not have the same information about your credit history.

2) If for no other reason than to keep it up-to-date, you should obtain a yearly credit report. It is not uncommon for errors and negative comments to show up in your records without your knowledge. Keeping your credit report clean is very important, as this will affect your credit score. It is often a long process to remove something from your report. It is a good idea to get a yearly credit report, so you know what is in the report. This can also help you to keep it free of errors that could hurt you. After all, you never know when you might find yourself needing something major like a refrigerator or a new vehicle. You do not want your potential creditor to be the one to find the red flag in your report that should not be there.

3) Unless you have been living under a rock for the last few months, you know how big the problem of identity theft has become. The news is full of stories about retail stores, banks, hospitals, universities, and other institutions privy to a wealth of our personal information that has failed to protect us. A yearly credit report lets you see if credit is being applied for in your name without your knowledge. This is the best way to tell if you’ve become a victim of identity theft. Getting a yearly credit report for your children is a good idea as well because child identity theft is a growing problem.

4) It’s not difficult to obtain a yearly credit report. In fact, they can be requested online for FREE by visiting www.annualcreditreport.com or by calling 1-877-322-8228. You will need to provide your name, address, social security number, and date of birth. You will need to provide some information on your credit report, such as the amount of your mortgage payment to verify your identity. Therefore, there is no reason to put off getting your yearly credit report. Remember, it is a check-up for your financial health.

5) You should review your credit report just like you do your bank statements and credit card bills. Managing credit, keeping track of spending and putting aside savings are all essential to being financially successful. It’s also important to make sure there isn’t any duplicate information listed on your credit report. A duplicate credit report entry occurs when a credit account is reported more than once. This can be a problem because it may show you have double the debt and increase your credit utilization ratio, thereby affecting your credit score as well.

6) Mixed credit reports happen more often than you’d think. If you have a similar name to another person, there’s a chance that your credit reports could get mixed up. Either your credit reports could be merged into one report, or the two reports could contain information from both of you. This occurs frequently with parents and children who share the same name and address, so it’s imperative to double-check all entries on your credit report.

What’s The SCORE On Those 3 Numbers?

Not only is it important to pay attention to one’s credit score and credit history, but it’s also important for a person to understand how those three numbers make a big difference in important life matters.

The credit score is comprised of three numbers that serve as a method of creating a benchmark for financial health. There’s a variety of benchmarks that determine how the overall score is tabulated, but here are the basic measurements that are considered:

  • How much debt is being carried vs. annual income?
  • How faithfully is revolving credit being paid on time?
  • How faithfully are monthly bills being paid on time?
  • How often is new credit being applied for?

Those who tend to generate high scores are those whose debt ratio is only a fraction of their total income – usually, creditors like to see a debt ratio of 30% or lower of a consumer’s annual income. Consumers with high credit scores also pay their monthly bills on time, and in full. The same holds true for their revolving debt, such as credit cards and charge cards. Moreover, they tend to be judicious about applying for new forms of credit.

The consumer scores run on a scale between the low 300s and as high as 850. Consumers who generate scores between 680-800 are considered good-to-excellent credit risks. On the other hand, consumers who generate scores closer to 300 are considered poorer credit risks. Consumers like these will see themselves generating much higher interest rates on the credit they apply for, and for those who have scores under 600, they’ll find it hard to be accepted for any form of credit at all!

What Can A Bad Score Influence?

There are plenty of things at stake for those who don’t take steps to frequently check on and try to boost their credit scores. These can include:

Rental housing: Rental property managers require certain scores in order for tenants to be approved for housing. Low scores can knock applicants out of desirable properties and neighborhoods to live in.

Mortgages: Consumers with low scores will find that they won’t be approved for mortgage loans. In addition, although those with fair scores might be approved for a loan, they’ll certainly find themselves paying an inflated interest rate on the loan.

Transportation: Although nowadays, consumers can finance a vehicle with poor credit, they’ll find themselves paying interest rates of 18% or more on the loan. Conversely, consumers with preferred scores pay much lower interest rates.

With all of the aspects of life that are affected by credit scores, it’s crucial to understand what they are, how they work, and how to stay on top of excellent financial health by reaching out to the credit bureaus for financial reputation control and fixing any errors as quickly as possible.

Conclusion –

Some people may not realize how important their credit report and credit score have truly become. It obviously has a large impact on your financial life, whether you’re applying for a loan or trying to get approved for a credit card or looking to rent an apartment.

We offer a Credit Report Review Service if you need help obtaining your credit report and understanding what’s on it. We’ll also give you some suggestions so that you can try to improve your credit score on your own and fix any errors on your credit report. Click Here to find out more about this helpful service.



Disclaimer: The information provided is for informational purposes only. The materials are general in nature, and are not offered as advice or guarantee, and should not be relied upon without advice from an attorney or a financial advisor. Reading the information does not constitute a legal contract, consulting, or any other relationship with Advantage Credit Counseling Service.
Author: Lauralynn Mangis
Lauralynn is the Online Marketing Specialist for AdvantageCCS. She is married and has two young daughters. She enjoys writing, reading, hiking, cooking, video games, sewing, and gardening. Lauralynn has a degree in Multimedia Technologies from Pittsburgh Technical College.