Checking Your Credit Report

You are entitled to a free copy of your credit report once a year. A credit report may not rank high on your list of favorite reads but it's still worthwhile to take time in checking it. By reviewing your credit report, you can spot errors and signs of identity theft. Since your credit report is essential for you to get a loan and a more favorable interest rate, it is important that it is as accurate and as secure as possible.

You can request for your credit report from any of the three national credit bureaus: Experian, Equifax, and TransUnion. It is a good idea to have copies from all agencies since each report is most likely different. If you've changed address recently for instance, one report may reflect your new address while another may still have your old one. The bureaus don't update their records at the same time so it's also probable that a new credit account may show up in one credit report and will still be unrecorded in another.

There are four basic sections in a credit report: identifying information, trade lines, public records, and credit inquiries. The identifying information contains basic data about you. Take time to go through this section since it could errors and inaccuracies as well as tell-tale signs of identity theft.

The trade lines list details of all your credit accounts as well as your payment history. One credit report may describe your payment history in words such as "never pays late" or "usually pays 30 days late" while another may employ payment codes. The public records section of the credit report is what you want to remain spotless. It contains notice of bankruptcy, foreclosure, lawsuits and other damaging information that can kill off your chances for a loan or a low interest rate. The inquiries section, which shows everyone who accessed your credit report, has two parts: hard and soft. Hard inquiries are made by credit card companies and loan agencies you've had credit transactions with while soft inquiries are from employers, companies that want to send you promotional credit offers, and your own credit report requests. It's only the hard inquiries that often matter to lenders.