From car loans to mortgages, your credit score can affect the rate and terms that you receive on loans. Whether you’re the forgetful type who occasionally misses payments or the conscientious consumer who methodically pays bills on time, you should check your credit reports on an annual basis. Checking your credit reports doesn’t have to be time-consuming.
Incorrect and outdated information can lower your credit score and raise the interest rates you qualify for on loans. According to the founder of Professional Credit Counselors, Deborah McNaughton, 80 percent of credit reports include inaccurate data such as wrong accounts and wrong birth dates. Removing misinformation can take 30 to 45 days, but checking your credit report on a regular basis can prevent hiked interest rates, fraud and other credit mishaps. Use Bankrate’s Credit Risk Assessment Calculator to find out if your credit risk is “good,” “fair” or “needs improvement.”
Thanks to the 2003 Fair and Accurate Credit Transaction Act, all U.S. citizens are entitled to a free annual credit report from each bureau per year. The three major credit agencies — Equifax, Experian and TransUnion — are required by law to provide a free credit report upon request through a centralized source, AnnualCreditReport.com.
Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348
Actual FICO scores must be purchased. You should also check your FICO score, a risk score that predicts the likelihood that you will become seriously delinquent on a debt obligation in the next 24 months. MyFico says that “good” scores start at 660, but the lender sets scoring thresolds. Use Bankrate’s FICO score estimator to estimate your FICO score.
Counts as a soft pull
Inquiries count as either hard or soft pulls on your credit report. Personal inquiries are soft pulls and do not affect your credit score in a negative light. Hard pulls are inquiries from a bank checking your credit risk or from an automobile dealer checking credit for financing a car loan. A hard inquiry may slightly lower your FICO score, but will only affect credit for one year.
Check your credit report at least annually for peace of mind about your credit history.