How To Get Free Credit Reports And Why You Need Them

By Alexandra Kerr. May 7th 2016

What Is A Credit Report?

A credit report is a formal statement recording your current credit activities. The information used to establish your credit report is gathered by a credit reporting agency, which collects information on credit cards, bank accounts and other forms of credit, then stores it to be sold in credit reports. They obtain this information from anyone who has previously granted you credit, like stores or banks that have issued you credit cards, loans or purchases. There are three main credit reporting agencies operating in the United States: Equifax, Trans Union and Experian, though many smaller agencies also offer reports. It is essential to check your credit score with all three major operators, as your score may vary between them.

Your credit score is a ranking of your banking, loan and credit card activity, which determines how stable or poor your credit is. While your personal credit information is available to be purchased by persons other than yourself, it is only sold to one of the following parties:

  • A person or organization considering granting you credit
  • Government agencies
  • Potential employers
  • Potential insurers
  • Landlords and other individuals with a legitimate business who need this information

Why You Need Good Credit

Even if the majority of your purchases are made in cash, a good credit rating is essential to large purchases, employment and various other contractual agreements or transactions. Should you want to take out a bank loan, buy a car, rent property or even accept a new job, your credit score is taken into consideration. By purchasing a regular credit report, you are able to notice issues in your credit rating before entering one of these situations. Monitoring your score can also help prevent or end identity theft, should you notice a credit issue in your report that was not your fault. High credit scores often allow you to receive bigger loans, as they act as evidence of your financial reliability.

How To Get A Free Credit Report

While you are entitled to one free annual credit report from each of the three major credit reporting agencies, it may be a good idea to use a service that offers more frequent reviews of your rating. Checking your report and score more than once per year may allow you to catch errors before an employer or creditor sees your damaged score. Websites like freecreditreport.com and freecreditscore.com offer you the ability to check your credit more frequently, but often come with monthly membership fees.

  • Some websites offer trial memberships that may be cancelled, allowing you to receive the report free of charge.
  • When using online companies to check your credit report, make sure they consider all three credit reporting agencies.
  • Be sure to confirm that the service includes your credit score in their report, as some companies do not include it for free.
  • In addition to credit reports, some services like Identity Guard and Protect My I.D. offer credit monitoring, which regularly checks your credit report and score for unusual activities and errors. They may also offer identity theft coverage, ensuring funds up to a certain amount will be restored to you should your identity be stolen. This may be a good idea for anyone concerned about identity theft, however monitoring and identity protection services are not free.

Good credit is a necessity for nearly every large purchase, from cars to homes, and is an invaluable tool in demonstrating your financial security and reliability to landlords and employers. Maintaining good credit is just the first step, however, and your report and score should be checked to verify no errors have been made. Reviewing your report and score more than once per year allows you to clear up identity theft or mistakes before they have the chance to harm you. Use available resources like free credit report websites to quickly verify the status of your credit, and ensure you are receiving an accurate representation of your credit history.

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