Most people are aware of the purpose of a credit report: to give an accounting of your credit history to determine how credit worthy you are currently. A credit report consists of several different sections that give as complete a picture as possible of your personal information, your credit information, public records and who is looking at you. A large percentage, nearly 70 percent, of credit reports contains errors. This is important to monitor your credit reports to ensure your credit is sound. However, it is equally important to monitor as a first defense against identity theft.
If you monitor your credit report regularly you can catch errors as soon as possible. The earlier you catch it, the easier it will be to fix and mitigate any possible damages that may occur. The first step in the process is getting your credit report. You can get one credit report per year at no cost to you and you can also get a credit report if you have been turned down for credit somewhere. After your free copies you can either subscribe to a credit monitoring company for a fee each month or you can request regular credit reports and save money.
Keep in mind there are three main credit reporting agencies. They are:
You can get a free report from each of the three reporting agencies annually. So, make sure to stagger your requests to get the most out of your free requests.
After you receive your credit report you need to understand how it is laid out and how to read it. This will help you identify any problems or errors in your credit report so you can deal with it quickly. The first section of the credit report contains personal information on you such as name, previous names used, addresses, social security number and driver’s license numbers. What is important to look for in this section glaring errors. It is fairly common to have your credit report contain a few misspellings. However, if there are identifying numbers, names or addresses that are not even close to yours, you need to investigate further as this may indicate fraudulent activity.
Your credit history is the next section that should be examined carefully. This section includes detailed information on each of your credit accounts, past and present. Make sure there are no errors. Common mistakes can occur with people who have similar names especially within a family. For example it is common to have a father and son who have the same name have their credit mixed up. These errors need to be corrected but it is likely an honest mistake and not fraud. But, if you see accounts on your credit history that are unfamiliar it is necessary to investigate to see if it is simply a mistake in reporting or a fraudulently opened account in your name.
The third section of your credit report contains public records and this may include judgments against you, criminal convictions and bankruptcies. A common error occurs when people who have similar names are included in your history. This is especially true when it comes to criminal records.
When you monitor your credit reports regularly you can easily and quickly catch any errors that may happen. This will accomplish two goals. First, you will be able to ensure your credit is sound and accurate so when it comes time to apply for credit you know your report is an accurate portrayal. But, it is also a great first indicator of fraudulent activity and identity theft. If you see errors, it is important to investigate and get them cleared up quickly.
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- Top Ten Ways to Build and Maintain Good Credit
- What to do if your Identity is Stolen
- Why do you Need Good Credit?
- How Credit Really Works: What Can you Really Do?
- The Truth about Credit Scores