Taking Advantage of Free Credit Reports
July 14th, 2020
In response to Covid-19, www.AnnualCreditReport.com is offering a free credit report from each of the three credit bureaus (Transunion, Equifax, and Experian) every week from now until April 2021, something that is normally free only once a year. We suggest taking advantage of this great opportunity! You won’t need one every week, but checking your reports every other month or so is a good place to start.
You might be thinking “Free credit reports…cool, but why should I care?” or “I’ve heard of credit reports, but I don’t know what’s even on them”. You’re not alone! I’ve had those same thoughts before, and that’s why I want to share what I learned. My goal is to talk about accessing the reports, knowing the difference between report and score, what the report shows, and how Save First can help you with your financial goal.
How to get your credit reports
Earlier this week I hopped online (again, at www.AnnualCreditReport.com) to get my own credit reports. In less than 4 minutes (3:31 to be precise, and yes I did time myself), I filled out my request and I was ready to look at my reports. So…in less time than it takes to read this blog, you could have your credit reports!
Credit REPORTS, not score
What’s important to know is what you’re getting are credit reports and these DON’T include your credit score. I understand that many people want a credit score because it’s a nice number to instantly know where your credit standing is, but the credit report is sometimes more helpful as it shows your credit history, which you can make changes to it if there are issues.
If you do want your score along with your reports, visit the credit bureau websites directly. Each of the three bureaus use different methods to calculate the score, so just know that the numbers will be slightly different. (WARNING: There are some websites that may charge money for your credit score…avoid these places! You should never have to pay for your credit score or credit report.) Another great way to get a credit score is by working with a Save First financial coach. With your permission, we can obtain a free credit report and score on your behalf and can work with you to help understand it.
What’s on the Credit Report?
I recommend saving the reports electronically, like as a PDF, so you can review them over time. The visual presentations of the reports are different, but the three bureaus show the same information: some of your personal information, your credit account history, and inquiries.
Your account history makes up the biggest piece of the report. There are two types of credit accounts: revolving and installment. Revolving accounts are items like credit cards, where each month has a different payment amount. There is a limit (e.g. available credit, credit limit) on these accounts, but the balance will change based on how much you use each month. Installment accounts are items like student or car loans. These have an original amount for what your borrowed, and the monthly payment is the same. What you still owe on the loan is the current balance. These also show the “terms”, which is how many months you will pay on the loan until it is paid off.
Your credit history shows the months you’ve made payments, months where payments were past due, if an account has gone to collections, or is closed. If you see anything you don’t agree with on an account, you can dispute the item by contacting the credit bureau directly. (For more on disputing credit report items, contact us!)
Another part of your report is inquiries. Inquiries are when a company looks at your credit report. There are many reasons why a company might do this, but the important thing to know is the difference between hard and soft inquiries. Hard inquiries, or “hard pulls” are done when you apply for a line of credit. For example, if you wanted a car loan from a bank, they would do a “hard pull” to check your credit history before offering you a loan. Hard pulls impact your credit score if you have a lot of them over a short time, but the impact is usually small and lessens over time. Soft pulls are done by companies and agencies if they want to promote something to you (e.g. “pre-approved” credit card offers) or are wanting it for educational purposes. For example, when we pull your report at Save First, that is considered a soft pull because it is used for you to learn more about your history. You getting a report from annualcreditreport.com is another soft pull example.
Of the three reports, my personal favorite was from Equifax. I thought it was the easiest to read and understand, and I appreciated how the accounts had a summary of information. It was helpful to take some time to look over all three of my reports and make sure everything looked correct.
How Save First can help
Credit reports can be confusing to understand; again, you’re not alone! Our team at Save First is here to help. One of our financial coaches would love to talk with you about your credit reports and ultimately help you reach your financial goals. Contact us at 503.688.2659 or hello@savefirstfinancial.org for more information about getting connected with a personal financial coach.