Time for your check-up?

Wednesday, November 3, 2010

It is part of our modern culture to have regular checks done on our teeth, our bodies, our car engines, and from time to time even our heads. It is now time to have routine checks done on our credit reports. Don’t feel too bad if it isn’t part of your routine yet. It wasn’t until 2003 that the Fair and Accurate Credit Transaction Act was put into place to provide us with a free copy of our credit report at our request once every 12 months. Before that time we had to pay for this service.

What is a credit report?

A document that includes information on where we live, how we pay our bills, whether or not we have ever been sued or arrested or filed for bankruptcy. It is from the information on our credit report that our credit score is calculated. It is this single number that defines who we are in the consumer world. It is based on this number that we are approved or denied our credit cards, loans and insurance policies. More importantly it is this number that determines the interest rates we are required to pay.

Who has our credit reports?

Our nation’s three consumer reporting companies (Equifax, Experian and TransUnion) write our credit reports. They are three separate companies and therefore write three separate reports. This means each of the three reports may have different information in them, but all three should report true facts about the consumer and their credit history. These companies sell the information in these reports to creditors, insurers, employers and other businesses that request it in order to evaluate our applications for credit, loans, insurance, employment or home rental.

Why do we need to check our credit reports?

There are three very important reasons to check our credit reports:
Identity theft - It is happening to good people every day. Don’t let it happen to you.
Loan approval – When you need or want your next loan the last thing you want is a surprise.
Accuracy – The report may have mistakes. The report needs to reflect the truth about you.

How often do we need to check our credit reports?

The Federal Trade Commission now requires the credit reporting companies to provide a free report, on our request, once every 12 months. An annual check up is a good start. However, just like with our health there are times when we should not wait until the annual check up. A credit report check is a good idea before applying for a major loan to find any problems that may result in the loan being denied in order to give you time to clear the problem up. A credit report check should be done if a loan or other application involving a credit report has been denied. If this is the case the law entitles the consumer to a free copy of the credit report and a dispute can be made if inaccurate information is found on the report. A credit report check should be done if there is suspicion of identity theft. Identity theft must be reported to the credit reporting agencies immediately. A credit report check should be the first thing done by anyone trying to get their finances in order.

Knowledge is power. Get informed and get in control of your financial situation. Now that you are on the road to healthy credit, pass the word to your friends and family. Encourage them to take the same steps toward financial health and freedom. Teach your children to treat this part of them with the same respect you teach them to care for their bodies and minds.