How important is your credit history? It can be critical if you are needing a mortgage, buying a car, applying for insurance, renting an apartment or house, or even when you are applying for a job. Sometimes even having no credit history can be a big barrier to obtaining a loan. An important step in building and maintaining good credit is regularly checking your credit history reports for mistakes. Inaccuracies on your credit report can cause lenders to charge you higher interest rates or even deny you loans. Your credit report may also be evaluated by insurance agencies when you apply for an insurance policy, landlords when you apply for leasing an apartment or house, and employers when you apply for a job. Checking credit reports can also help you uncover identity thieves who may have illegally opened credit accounts in your name. Checking your credit history is free. The Fair Credit Reporting Act allows you to obtain one free credit report per twelve months from each of the three consumer credit reporting companies – Equifax, Experian, and TransUnion. Your credit history may differ between the three credit reporting agencies. For example, a lender may report to Equifax but not to Experian, so if you just checked your Experian credit report, you would not see the loan in your credit history. A good strategy is to request one credit report every four months, alternating the company you request from each time. You should not contact the credit reporting companies directly for your free credit reports. Instead, you may obtain your free credit reports on AnnualCreditReport.com. AnnualCreditReport.com is the only website authorized by federal law to provide the free annual reports. If you find incomplete or incorrect information in your credit history report, you should dispute the inaccuracy by contacting and supplying with evidence the credit reporting agency and the entity that provided the incorrect information. The information provider must research the matter, and if it determines the information is inaccurate, it must notify all three of the credit reporting agencies so they can correct your credit history reports. If the credit reporting agency or information provider determines the information is accurate as is, they may not change your credit report. In that case, you should request a copy of your written dispute be included with your future credit reports so any entities that receive your credit reports are aware of your dispute. Please note that your credit report is different than your credit score. Credit scores are calculated based on information in your credit reports and used by lenders to grade your creditworthiness. Credit scores are most relevant to individuals who are trying to obtain large loans, such as a home mortgage, because lenders use credit scores to determine what interest rate to charge the borrower. Your credit score is comprised of your payment history, total debt, length of credit history, new credit history, and types of credit used. See myfico.com for ways to improve your credit score. Be aware that there is no quick fix to your credit history; rather, it is a long-term process, and this is the reason that it is so important to establish and maintain good credit long before you need a loan. The Fair Credit Reporting Act does not require any companies to provide your credit score for free, so be prepared to pay for your credit score if you want it. Purchasing your credit score is not necessary if your only objective is monitoring your credit history to detect errors and identity theft. Obtaining your three free credit reports on an annual basis should be a sufficient way to monitor your credit history and ensure its accuracy. Sources: Federal Trade Commission *FMP Wealth Advisers does not provide investment, tax, legal, or retirement advice or recommendations. The information presented here is not specific to any individual’s personal circumstances. **To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. ***These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.