Your credit is an essential tool to help you accomplish your financial goals. Getting approved for a home loan or other types of financing largely depends on your credit score—which is why checking your credit report is so important. Learn how to get your free credit report and why it’s important.
Below, we’ll walk you through some basics about credit and how you can easily check your credit reports for free today.
Your credit represents your financial trustworthiness, specifically regarding your ability to repay any money you borrow. When people talk about credit, they are usually referring to credit scores or credit reports.
● Credit score: Your credit score measures your “financial risk”— represented as a number between 300-850, with 300 being the lowest and representing an increased risk to potential lenders. On the other hand, a score of 850 signifies a low-risk, highly
responsible borrower.
● Credit report: Credit reports are your financial track record and contain detailed information on your borrowing history, such as how responsibly you have repaid loans and credit cards. For example, any missed payments will show up on your credit report.
The credit reporting agencies use the information on your report to calculate your credit
score.
Most people cannot make large purchases with cash (such as buying a home or car). Therefore, their only option is to borrow from a bank. How does a bank decide whether or not to lend you money?
By looking at your credit report and score. Those with lower scores may be perceived as a riskier investment and may not be approved for a loan.
If approved, the bank might charge you
a higher interest rate to compensate for the increased risk—making your loan more expensive.
Fortunately, obtaining your credit reports is easy and free. Federal law entitles you to three free credit reports per year (from each of the three main credit reporting agencies). You can receive additional free reports in certain situations—for example, if you are a victim of identity theft or are
denied credit.
To access your free credit report, go to Annual Credit Report and hit “request your free reports.” It will prompt you to complete a short questionnaire that asks for your name, address, social
security number, and other information to help confirm your identity.
After filling out the form, you will have to choose which credit report to request, which leads us to our next point.
A question we often receive is regarding the difference between credit reports from Experian, TransUnion, and Equifax. Though the details on each of the reports may vary slightly, they all
generally have the same information.
We recommend requesting one report at a time instead of all three at once. That way, you can monitor your credit throughout the year to track any changes and check for errors or identity theft.
Reviewing your credit report is the first step in gaining control over your financial situation and accomplishing your goals. Fortunately, requesting your three free credit reports is easy and only
takes a few minutes.
However, if you want to keep a closer eye on your credit, you may want to consider signing up for a monthly credit monitoring service.
$99.95 Per Month
Credit-Nerd.com is a provider of credit reporting and credit monitoring services. For a $1 trial, users get unlimited credit score and report access and many other features. Once the 7-day trial period concludes, the monthly charge will be $19.95.
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