Before we actually get down to the process of how to monitor your credit reports, let’s talk about why it is important. You’re a good person, you have a job, you pay your bills on time, you’ve got a car, a mortgage and 2.5 kids…you’re living the American dream, you’ve got nothing to worry about, right? Quite the contrary.
Credit reports contain information from many sources. Whether it is a simple error, omission, typo on an address or malicious attempting to steal an identity, it is imperative that we keep an eye on our reports. About a decade ago my parents were going through the process of refinancing their mortgage to obtain a more favorable rate and leverage some of their equity to make some improvements on the house. My step-father’s credit was great, but Mom’s looked like Swiss cheese. Late payments, no payments and high balances littered her reports all within the last 18 months — and she was floored.
The good news here is that none of this was actually mom. The bad news? She was a victim of identity theft. It took several months to get sorted out but it all worked out. The bank even honored the rate they had initially discussed. The lesson learned here was that Mom needed to watch her credit report and she needed to do it regularly. While my stepfather hadn’t fallen victim, it was an opportunity for him to pick up a good financial habit.
The site AnnualCreditReport.com didn’t exist at the time, so they contacted each creditor and got their report. In Massachusetts they’re allowed one report from each of the three credit bureaus every year. As a Georgia resident, I’m allowed two per year from each bureau free of charge. Know the laws for your state, and at an absolute minimum you should be getting your free reports once a year.
Credit reports may be formatted differently from the credit bureaus, but there are four key items you’ll find on every one of them:
- Information that identifies you – Your full name, social security number, date of birth and employment information. As you apply for credit/loans, this information is reported back to the credit bureau that a creditor sends their inquiry to. You will typically see your current and most recent previous address; same goes for your employment history.
- Lines of Credit/Loans – Your accounts. Not your checking and savings accounts, but your credit accounts and loans. The type of account (real estate mortgage, credit card, charge card, student loan, auto loan), the date the account was opened, the credit limit, account balance and payment history are all components with each account.
- Number of Inquiries – These are called “hard” inquiries and occur when you have applied for a loan/credit account with a creditor. When you check your credit report or you use a third party service such as AnnualCreditReport, CreditKarma or CreditSesame, any inquiries are considered “soft” inquiries and have no impact on your credit score.
- Public Records or Collections – State and local court records along with information from collection agencies would be reported here. Items include bankruptcy, liens and financial impacting judgments to pay debts.
Credit reports do not include credit scores. When you get your report from AnnualCreditReport.com you won’t receive your credit scores; legally you’re not entitled to them for free. They’re an upsell from the credit bureaus if desired.
The approach I take is a combination of using free services and a monthly paid service to monitor my reports and score. As someone that applies for many accounts over the course of a year, it is important to know which credit bureau creditors are pulling from and the impact on my credit score of that inquiry. So, here’s what I do:
- FREE – CreditKarma.com to watch my TransUnion credit score and credit report. When any inquiries or changes to my report occur, I receive a notification from CreditKarma. I can get an updated credit score every seven days.
- FREE – CreditSesame.com to watch my Experian credit score and credit report. When any inquiries or changes to my report occur, I receive a notification from CreditSesame. I get an updated credit score once a month.
- FREE – Quizzle.com to get my Equifax credit score and report every 6 months. While it isn’t monthly or in real time, it does provide some coverage on the third bureau and the price can’t be beat. Quizzle offers additional services for a monthly charge.
- FREE – Monthly TransUnion credit score through Barclaycard Arrival World Mastercard. Only the score, but it comes for free just by having the card.
- FREE – Monthly Equifax credit score through DCU, my credit union. I get a score the last Friday of every month.
- $12.95 /month – ScoreSense monitoring & reporting. Normally $29.95/month, I did a 7-day free trial and when I called to cancel, they countered with a $12.95/month credit monitoring service along with monthly report and credit score across all three bureaus. At that price, I took the deal. This might work for you too!
This isn’t to say that you need to sign up for a pay service, but it is what I have done and what works for me. Given the diversity across my credit files and importance I place on ensuring I have a solid credit score and clean report, the monthly service charge makes sense because it really is a one-stop shop for me. The others are all free and give me almost the same exact coverage, but I’ll pay this for a consolidated view. The image at the top of this post is an actual screenshot from my ScoreSense account; the image below is a screenshot showing a list of accounts.
As you can see, the majority of accounts on my credit report are closed. Those closed accounts will continue to show up on my report for 10 years (whereas negative accounts fall off after 7 years — I know, it almost seems a bit backwards) and will continue to have a positive effect on my overall score/health of report. Accounts that have no derogatory remarks and are closed while having a less significant impact to your overall credit score (versus open accounts), show history with your credit health. It is this history that adds an incremental positive effect on your net credit score.
Got a question about a monitoring or reporting service? Just ask. If you’re not already using a free service, I hope you’ll start now. And if you haven’t checked your credit report in the past year, you have no excuse not to use AnnualCreditReport.com. It is completely free. Let’s be smart consumers — your credit is one of your most important assets.
Next up: Maximizing Your Benefits With Credit Cards
More Rookie Guide:
- Introduction and Background
- Set Your Goals
- Points, Miles and Credits
- Airline Miles
- Hotel Points
- Rental Cars
- Bank Rewards
- Vouchers and Credits
- How Your Good Credit Can Help You Travel For Free
- Airline and Airline Alliances
- Hotels and Their Programs
- Program Partnerships
- Saving with Consolidators
- Priceline
- Hotwire
- Expedia Express and Others
- Double and Triple Your Bonuses with Online Shopping Portals
- Earning Without Even Thinking About It
- Rewards Network Dining
- Plink and Others
- Keeping Track of All Those Points and Miles
- AwardWallet
- FTG Wallet
- Spreadsheets Galore
- Review Your Goals
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Delta® Reserve for Business
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Spend
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0
$3,000
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