Most people know that you can access your credit report once per year for free. What is this report all about though and why is it so important?
What is a Credit Bureau?
A credit bureau is a consumer reporting agency (CRA). They collect facts about how you handle your money, specifically the extension of credit. A credit bureau is on hand to keep track of when you applied for loans, how much credit you applied for, how much you received, and how well you pay your bills on time.
A credit bureau also knows whether you’ve ever left a credit account unpaid and exactly how much you owe to each of your creditors.
Credit bureaus sell this important credit information to all kinds of entities for a variety of reasons. Some companies buy your credit history so they can send you credit card applications.
What is a Credit Report?
Your credit report is a document that consists of the information a credit bureau puts together regarding your credit finances and bill-paying habits over time. Your credit report includes:
● All addresses where you’ve previously lived and been extended credit
● Creditors you currently owe
● Closed credit accounts
● How many times and to whom you applied for a loan
● Bill payment history
● If you’ve ever filed for bankruptcy or had a tax lien during the last 10 years
How Can You Obtain a Copy of Your Credit Report?
You can go online to request a copy of your free credit report through Annual Credit Report, www.annualcreditreport.com or by calling (877) 322-8228. You’re allowed one credit report per year free of charge from each of the credit bureaus.
To request your free annual credit report:
• Online: www.annualcreditreport.com
• By phone: (877) 322-8228
• By mail: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281
It is not at all unusual to receive different information from each credit bureau. Banking institutions often use just one credit bureau instead of paying to use all three. Any detailed information they have about your loan habits might only be sent to one of the credit bureaus.
Why Obtain a Copy of Your Credit Report?
It is important to stay informed about your current financial position in terms of how well you’re managing credit cards, loan payments, etc. You will want to get a copy of your report at least once per year. Many companies will look at your credit report before hiring new employees. Cell phone and insurance companies also typically pull your credit file before taking your business.
The information contained in your credit report will also go a long way toward determining if you can get a loan and how much interest you’ll be charged. Your credit report can save you many multiple thousands of dollars on large loans like a mortgage or car loan. Conversely, an unflattering credit report or one riddled with errors can cost you a fortune over time. A pristine credit report with a long credit history will get the best rate and the largest extension of credit.
In the event your personal ID, credit card, or a checking account has been compromised, be sure to follow your credit report very closely for some time afterward.
Credit reports also often have mistakes, so it’s important to keep track of all the information listed in your report and know that it reflects on you accurately. Mistakes can be removed or corrected with a little work.
Summary
Understanding what a credit bureau is as well as how and why they gather your credit report is important to knowing where you’re at in your financial life. If you don’t have a long credit history, get started building a good report from the ground up. If you were lax or financially negligent in the past, work on making the necessary changes to get things turned around.
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