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How Often Should You Check Your Credit Report?

Wednesday, July 17th

How Often Should You Check Your Credit Report?

As the old adage goes, "knowledge is power." For consumers, that knowledge should include a full understanding of their credit report, the score attached to it and how that information is used.

Consumers who know how their credit history affects their everyday living possess a valuable tool. The list of agencies that can use your credit report to determine if they wish to do business with you is endless: landlords, credit card companies, insurance providers, cell phone companies and utilities. Not paying bills on time - or at all - can have negative repercussions on your credit history, causing damage that is not easily undone.

From the very first bank account you've ever had, to all of the credit cards you hold, a person's credit history is a complete synopsis of how you have managed your finances over the course of your life. Whether the history is good or bad, it is prominently displayed within the pages of your financial documentation, otherwise known as your credit report. Financial brokers, credit card companies, financial institutions and even employers can use the information to their benefit and your detriment.

All credit reports contain a three-digit number called a credit score. It ranges from 300 to 850. The higher the number, the more financially secure the individual. Credit scores are generated through a mathematical algorithm that pulls data from a consumer's credit report and processes it into one handy rating.

So how often should you check your credit report? At a minimum, once annually is recommended, although 3 times or more is ideal.

Thanks to the Fair Credit Reporting Act, all consumers now are permitted to receive one free credit report yearly. There are three credit reporting agencies which track the financial histories of U.S. residents: Equifax, Experian and TransUnion. While it is possible to order reports from all three agencies at once, some consumer experts recommended ordering one from each agency about four months apart. That way, consumers are able to view their report three times a year for free rather than just once.

Another opportune time to check your credit report is prior to any attempt to secure a loan for a large expense, such as a home or a vehicle. Knowing your current standing, and being able to find and correct any discrepancies in your report prior to applying, can help you to receive a more competitive interest rate. If a consumer discovers discrepancies in their credit report, they have the option of disputing them directly through the credit reporting bureau. Each credit reporting agency provides information on their respective websites on how to file a dispute.

If you've ever been denied credit - such as opening a new credit card account or taking out a loan - it is best to check your credit report. Inaccurate information may be contained within your credit report which is preventing you from getting credit.

The final and perhaps most important time to check your credit report is if you suspect you are the victim of identity theft. Your credit report will contain any fraudulent accounts opened using your personal information and may be a useful tool for law enforcement to track down the person who has committed the financial fraud. You also will need to be able to list all of the accounts which were not legitimately opened by you in order to have those accounts flagged and removed. If you find errors on your credit report, TopConsumerReviews.com has reviewed and ranked the best credit repair services available today.

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Credit Monitoring Company FAQ

Credit monitoring keeps an eye on financial transactions associated with your credit use: your buying behavior, changes in your credit score, and so on. When potential fraud is detected, a credit monitoring service notifies you quickly so that you can put a stop to any unauthorized use of your information or money.
Unless you have the time and energy to keep an eagle-eye watch over all of your accounts, credit monitoring is a must in this age of phishing scams, spam phone calls, and data breaches. Having a credit monitoring service in place can shut down fraudsters early on, before any serious damage is done to your credit history (or your bank balance!).
It's important to point out that credit monitoring doesn't prevent fraud. It can only give you tools to try and protect yourself, while letting you know right away if anything suspicious is detected. Credit monitoring won't stop your credit card from being skimmed, keep your data protected if there's a breach somewhere, or prevent an identity theft from applying for credit in your name.
Both types of score represent different models used to predict how likely it is that any given consumer will be at least 90 days behind on a bill sometime in the next two years. Because they give different weights to the various components in their calculations, the scores they return can be different for the same individual. For example, to get a FICO score, you need to have at least one credit account that's six months "old" or more, but a VantageScore only requires you to have one active account (even if it's not six months "old" ).
Many services are offered at no charge. Yes, you read that correctly: you can get a certain level of credit monitoring for absolutely no fees. However, if you're looking for the most comprehensive services, you can expect monthly fees ranging from $12 to $35.
It's definitely worth considering. Because most minors don't have extremely active credit accounts (car loans, credit cards, and so on), fraud can go undetected for a very long time. Without credit monitoring, your child could go to apply for a college loan or their first credit card and find out that someone has been using their name to open accounts for years!
Be sure to check out what other customers have said about the service. Also, look for a listing with the Better Business Bureau, to give yourself that added assurance that the credit monitoring service you're considering is reputable.
While your credit card company probably does alert you if fraud is detected, it's not designed to be comprehensive: they don't keep an eye on your bank account or any use of your Social Security number to open accounts. Your bank may provide your credit score when you sign into your account, but they don't flag most transactions. Unless you're going to play an active role in monitoring your credit, it's worth it to pay for a service to track it all for you. Plus, many credit monitoring services will help you restore your identity if it's compromised while you're a subscriber.
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