When your budget won't let you give gifts to everyone in the world—which is always, by the way—who should you give...
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You know you should get a copy of your credit report every year and check it over for any inaccuracies.
But do you actually do it?
Most people don't because they're confused by all the numbers and terms. Once you've learned what all that information means, you'll have no trouble reading your credit report. And since 79% of all credit reports contain some kind of error, it's important that you not only get an annual copy of your credit report, but that you check it over to make sure everything is correct.
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Obtain a copy of your credit report from the three major credit-reporting agencies: Experian, TransUnion and Equifax. You are allowed one free copy every year from each of the agencies. The reports are not automatically mailed to you; you must ask for them.
There are four parts to any credit report:
This section lists your name, address, Social Security number, date of birth and other information used to identify you. Read through the information carefully. It isn't uncommon to find your name misspelled or the wrong address listed.
The bulk of the report is in this section. It's a list of your open and paid credit accounts. It also shows any late payments on your part. Things like total loan amount, high credit limit and how well you've paid the account are included as well. Read and re-read this section to make sure all information is correct. If you've closed a credit card account, double check to see if it's noted. Thirty percent of credit reports contain credit accounts that were closed by the consumer but are still listed as open on the report.
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You want this part to be blank. Financial activity like bankruptcy, tax liens and judgments are listed here. Everything given is public record, and you want to keep this section as clean as possible. It's not about saving your credit score; it's about saving your financial life. The smarter you are with money decisions, the better financial life you will have.
Everyone who has asked to see your credit report will be listed in this section. If anyone checks out your report, a detailed inquiry will be posted. This is extremely beneficial for you as the consumer. The inquiries are in two sections soft and hard. Soft inquiries are from companies who want to send you promotional materials or from current creditors who are checking your account. Hard inquiries are made when you fill out a credit card application.
Visit annualcreditreport.com or call 877.322.8228 to order your free annual credit report. Remember to obtain your report either through that website or phone number. If you order it directly from the agency or any "free" report scam sites, you will be charged a fee.
For more helpful information, check out Financial Peace University. Dave devotes an entire lesson to teaching you about credit bureaus and collection practices.