Practically speaking, what does that mean? How can that single piece of advice protect you? Though it sounds like an advanced financial maneuver, checking your credit report is easier than balancing your checkbook. All you have to do is get it, read it, report errors, and monitor it. Let’s look at each step in detail:

1. Get your free credit report

Experian, Equifax, and TransUnion are the three major credit reporting agencies. They share data, but each makes its own report. You’re entitled to one free report from each agency every year. If you know you’ve got a major purchase coming up in the next year (like a car or house), you’ll want to check all three bureaus before you start shopping. This way, you can catch inaccuracies before lenders see your information and score. Otherwise, stagger them and view one report every four months. This puts the shortest amount of time between checks.

You can also get your credit report for free at annualcreditreport.com, which is the only FTC approved website for this purpose. Take care to avoid “imposter” websites operated by scammers. They may use similar-sounding website names or common misspellings to trick you and steal your personal information.

There are two other situations in which you can get a free copy of your credit report. If you are denied credit, you can request a copy of the information that was used to make that determination (provided you do so within 60 days). If you have been the victim of certain kinds of fraud, you’re also entitled to a free copy of your credit report to help you make it right. These checks will never hurt your credit score.

If you’ve requested your credit report online, it should be available immediately. You may need to answer a few questions to verify your identity, but once you answer these questions, you’ll get your report.

2. Read your report

Now that you have your report, it’s time to look it over. There are three things you’ll want to look for.

• Find open accounts in your name. 

Reports vary slightly depending on the issuing bureau, but each report will list your open accounts. They may be broken down by type (mortgage, installment, revolving, and other) or listed by date. You’ll want to look through each one to make sure you recognize them. This can be challenging, as bureaus include every store credit card you open and every installment loan you make. If there are any accounts you don’t recognize, you’ll want to make a note of them and potentially contact the credit reporting agency. Look particularly for accounts attached to P.O. boxes or out-of-state addresses.

• Check for any collection activity. 

“Negative items” include bankruptcies, accounts in collection, or accounts reporting as past due. Fraud often appears as negative items on your credit, because if someone else opened an account in your name, they likely won’t be paying the bills. You’ll also want to look for inaccuracies that may be hurting your credit score. If there’s an account listed that was discharged in bankruptcy, for example, you’ll want to make note of that, too.

• Take a look at the number and frequency of credit inquiries.

The list of inquiries shows you the number of times someone has checked your credit. No one can do this without your permission, so if there are more inquiries than you remember, it could be a sign someone has stolen your identity. It might be worthwhile to freeze your ability to open new accounts until you’ve gotten everything resolved.

3. Report inaccuracies

Each reporting agency maintains separate error-reporting processes, so you’ll have to report each error to the agency that made it. For basic errors (like address, name, or personal information), the agency can make corrections easily. For more serious errors, you’ll need to send a dispute letter.

The FTC has a template for a dispute letter available on its website. You can use that or you can draft your own. Either way, you’ll need to clearly identify the accounts or items you’re disputing and explain why you consider it an error. Where possible, use partial account numbers or other numerical information. Attach copies (not originals!) of documents supporting your claim, such as police reports for lost or stolen wallets, bankruptcy orders discharging a debt, or letters from a lender indicating fraud.

Send your letter via certified mail. While you’ll have to pay for mailing it, you’ll get proof of receipt. This is important because the agency has 30 days to make a determination about your dispute. They’ll send your dispute to the information provider (the company that informed the agency about the account or negative item).

If the reporting agency finds your claim to be correct, you can request they send copies of your updated report to anyone who received your credit report in the last six months, and to any employer who pulled your credit report over the last two years. They’re also required to send you an updated copy with any new information in it.

4. Monitor it

Checking your credit report periodically is the only way to keep yourself safe from identity theft and other cyber crimes. If you need assistance, we’re here to help. Call, click, or stop by today to find out how we can simplify the process!