In an alarming report, the FTC announced that 26% of consumers had “material errors” on their credit reports, and that 5% had such severe inaccuracies that they could face higher interest rates or outright denial without cause. A mistakenly lowered credit history can be worse than simply being denied a credit card: Insurance companies, utilities providers, potential landlords and even some employers take your FICO score into account.
Given the high probability of an inaccurate report, and the potential negative consequences, here are four must-do tips for monitoring your credit health.
1. Exercise your right to a free annual copy of your credit report.
Each of the three credit reporting companies – Equifax, TransUnion and Experian – must provide you with a free copy of your credit report once a year. You can get a copy by going to annualcreditreport.com. However, you are not entitled to a free copy of your credit score – the numerical value that synthesizes all the information in your report. On the bright side, there’s a way to get that for free, too.
2. Check your credit score for free with a little fancy footwork.
Though you have no legal right to a free copy, you can find your credit score for free by signing up for a credit monitoring service like GoFreeCredit.com or TransUnion and canceling your subscription within the trial period. Though both levy a $16.95 monthly charge, if you cancel within 30 days (GoFreeCredit) or 7 days (TransUnion), you won’t have to pay a fee.
3. As of 2011, if you are denied credit or offered a high interest rate, you’re entitled to see your credit score.
A provision of the Dodd-Frank financial reform bill requires that anyone who makes a judgment against you based on your credit score tell you:
- Your score at the time of application
- The number of recent inquiries on your report
- Specific reasons for your denial – “you didn’t meet our standards” is too vague. Possible answers might be, “your income is too low” or “you haven’t held your job for long enough.”
This provision applies not only to lenders who reject a loan application or offer a higher interest rate, but also landlords, utilities, insurance companies and any other “creditors” who base their decisions off of your credit history.
4. Married women: Be particularly vigilant.
Many married, divorced or widowed women run into trouble with their credit histories because creditors reported joint accounts in the husband’s name only, or the credit history built up under the women’s maiden names is lost. Make sure that creditors are reporting joint accounts under your name and Social Security number, and know that you are able to have credit under your birth name (Jane Doe), your first and spouse’s last name (Jane Smith), or your first and a combined last name (Jane Doe-Smith).
We’re expected to visit the doctor every year for a checkup. It’s completely free to ensure that your credit report is accurate, so take your financial health as seriously as you do your physical health.