FNTN

Introduction.

Did you know that you are entitled to a free credit report now? Whether you did or didn’t know that fact – do you know why you really should ask for a free credit report right now? If either of your answers to those two questions was ‘no’, then you should find this article of help to you in understanding what your free credit report will tell you and how to set about getting it.

What is a credit report?

A credit report is quite simply a snapshot of your finances at any one time, by obtaining a credit report you’ll be able to see a personal account of all your loans history, any current loans you might have, information about your credit cards, bank and savings accounts and mortgages. In other words it will contain all the known information about you and all of your credit history. Something else you will see on the credit report statement is your FICO credit score, which is a numerical value of your perceived credit worthiness. Various financial agencies can arrange for you to have a credit report at any time you desire. However, once a year, or every period of 12 months, you are entitled to a free credit report from the three national consumer credit monitoring and reporting agencies: Experian, Equifax and Trans-Union. Rather than thinking why should you get a free copy of your credit report you need to think more about what might be in your credit report. A common reason for people avoiding getting a copy of their credit report is that they fear there will be something in it that they won’t like or, worse, didn’t expect. The fact is – that is exactly why you should get a copy of your credit report. Let’s consider the following three scenarios, and please do read all three as they each contain information relevant to anyone seeking a free credit report.

Have you anything to fear from your free credit report?

You’re really in debt and you really know it.

First there’s the person that knows they’re in debt, whether it’s through personal loans, a mortgage or worse a sub-prime mortgage, credit cards … whatever. They may well think that there is no point in getting a credit report, just to be told what they already know. People who are in debt very often don’t realize just how much in debt they are. By actually seeing written down in one credit report all of the loans and debts they owe, can be quite a sobering moment for them, helping them to resolve to clear those debts. Quite often such people will then go out and seek a debt consolidation loan to help them pay off all those debts that are spread over several loans, credit cards, mortgages etc; making it so difficult to keep track of which debts they have paid off and what they still owe.

Spending his money on these two he could be in for a shock with his free credit report.

You have debts but always pay them off on time.

Most of us will have some sort of loan or debt to pay off; whether it’s an auto loan, a credit card or mortgage etc. However, not everyone gets behind with their payments and, if that’s you – why should you worry about getting your free credit report? Two main reasons occur here, first is to make sure that your credit history is accurate and that all the loans or debts you had are correctly cleared because, secondly, if your credit report isn’t accurate it could affect your ability to get a new loan or credit card should you want one. The significant factor determining your ability to get a new loan etc is your FICO credit score, so make sure you read about that as well.

Without knowing your credit report you might as well be throwing your money away.

If you have no debts.

OK you have no outstanding debts, well first lucky you and good luck to you, but unless you’ve never had a loan of any sort – personal, auto, credit card, mortgage etc; you will still have a credit history. How do you know your credit history is correct and accurate? Quite simply you don’t, unless you check it against your credit report. There are three main reasons for you to do this. First if the credit history isn’t accurate your credit score will be lower than it should be and, secondly, you could then be refused, or have difficulty, getting a new loan. (See the section on FICO credit scores). But, thirdly and this can apply to anyone, your free credit report could reveal loans, credit cards even mortgages in your name that you had no idea existed! How can that happen? Quite simply by identity theft. Someone could take out a loan or credit card etc in your name and, unless there was a problem with a repayment you’d never know. Of course, if someone does steal your identity and fraudulently take out a loan or whatever in your name – when the problem with repayments arises it would then become your problem to deal with. By taking advantage of your annual free credit reports you could avoid all that hassle and potential expense caused by identity theft.

You could really end up as the victim of identity theft!

Your FICO credit score.

On your free credit report you will see your FICO credit score, which is a numerical value of how credit worthy you are based on the statistics generated by your credit history and current debts. In simple terms the higher your credit score the more credit worthy you are. That’s not to say that with a poor credit score you wouldn’t be able to get a new loan or credit card, but you would be a higher risk and so might have to pay higher rates of interest. Interestingly a recent report stated that consumers with a credit score of over 740 can get the best rates on credit card repayments. If you have a poor credit score you can improve it by paying off any outstanding loans, paying credit card loans in full at the end of the month and never spending more than 20% of the limit value on your cards.

That’s shocking on my computer - a disgusting credit score!

Getting your free credit report.

Getting your free credit report is simplicity itself. Just type into your favorite search engine “free credit report” and select a website to use. Don’t forget you’re entitled to one free credit report a year – which actually means three free credit reports; one each from Experian, Equifax and Trans-Union. So there is no excuse for not paying off your debts and seeing your FICO credit score improve over any one period of 12 months. All you need to do is take out one company’s free credit report now, another one in say 4 months time and the third one in 8 months time. That way you can monitor your debts and credit score through free credit reports all year round.