Daily Financial Challenge – Day 3

Now that we have tried to lower the interest rate on our credit cards and learned the most effective way to pay off credit card debt, we will take a slight tangent and learn a bit about our credit reports. Understanding your credit report is important because not only it help you prevent identity theft, your credit report also determines what type of rates you get when you borrow money for a house or car. It’s also used in a lot of other ways these days including whether you are approved to rent housing and even if you get a job. Since this report can affect a number of personal finance areas, it’s worth the time to become familiar with it and understand how it works. By doing so, you will be in a better position to control your personal finances.

Luckily, you can now access your credit reports for free once a year from each of the three major credit report agencies (Equifax, TransUnion and Experian) in a joint venture with the Federal Trade Commission (FTC). This allows you to check the report to see if there is anything inconsistent with reality and gives you a chance to correct mistakes in a quicker fashion.

free credit report

In the time you have allotted for the Financial Challenge today, you will order your free credit report from Equifax. You have three choices in ordering it. You can go to AnnualCreditReport.com and order it online, you can call toll-free 877-322-8228 or you can request it by regular mail by writing to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. When you request your credit report, you may be asked to provide your name, address, Social Security number and date of birth. In addition, the credit agency may ask you for specific information to confirm your identity as a safety precaution such as the amount of your monthly mortgage payment.

While it’s possible to order all three of your credit reports at once, we will stagger the three reports so that you receive one report every 4 months. While none of the credit reports is exactly the same (each company gathers their information from different sources so they will all look a bit different), by staggering when you receive the reports over the year, you have a better chance of detecting possible fraud as well as see how certain activities affect your report. We will therefore order a credit report from TransUnion in May and one from Experian in September as part of this challenge.

The one exception to this is if you are considering a large purchase – such as a home or car – where your credit score will be used to determine your eligibility. In this case, please get all three credit reports right away so that any potential problems in them can be addressed as soon as possible.

Once you’ve received your report from Equifax, you should review carefully looking for any errors. If you have any questions or don’t understand any part of it, you can leave a comment in this challenge or place it in the forums where others familiar with the credit reports will help you understand.

Since each of the credit reporting agencies handle tens of millions of pieces of information each year, it’s common to find incorrect information in them. Make sure that all the information contained in the Equifax report is accurate. If it shows late payments or other negative information that is incorrect, you’ll want to challenge the incorrect information. It only takes a single incorrect late payment in your credit report to have a significant impact on what you pay in interest rates on your credit cards and other loans. You can get information on how to dispute errors you find from the FTC or the Consumer Union.

As well as checking for incorrect information, take the time to look for fraud within your reports. make sure all the credit card accounts in your report are familiar. One of the most common tactics that identity thieves use is to open a credit card account in your name and then make a large number of purchases leaving you with the bills. Also review the section of who has accessed your credit report recently. If you find that inquiries have been made by businesses outside your state that you can’t account for, this may also indicate that identity theft is taking place. Another important entry to look for is mistakes in identity. If a person has the same or similar name or address as yours, their information may have accidentally found its way into your credit report.

While the credit reports are free of charge, they will not include your credit score, the number produced by the credit report agencies that lenders use to measure the likelihood that you’ll repay your debts. We will talk more about credit scores at a later date in one of our Financial Challenges.

It should be noted that if you decide to order your report online, the credit reports must be ordered from the FTC site to get them for free. If you order your credit report directly from the Equifax website, you’ll be charged a fee for the report.

NOTE: The entire challenge series is what I would do with my money and is merely my opinion. You should do thorough research and seek professional advice and decide to do what is best for you. My Disclaimer

This entry was posted in Credit Cards, Personal Finance. Bookmark the permalink.

13 Responses to Daily Financial Challenge – Day 3

  1. fern says:

    Is it a big deal to correct misspellings of your name, say, like, if there are 3 versions and only 1 is correct?

  2. davis says:

    I would take the time to make sure your name is correct. My last name is common (Davis) while my first is a bit unusual and often gets misspelled. I had it misspelled in my credit report for an account that was mine, but about a year later I started to get accounts for the same misspelled name that weren’t mine in the account. It was a name identity mistake, so I would do the paperwork to change it if I were you.

  3. Caitlin says:

    Huh, I didn’t consider getting one every 4 months…great idea

  4. mjrube94 says:

    Great challenge…I’ve been meaning to do this for awhile and just never got around to it. I especially like that they let you print it right away instead of having to wait for it in the mail. Also, the “one every 4 months” approach is great…I wouldn’t have thought of that myself.

  5. Pattie says:

    I followed this advice recently as suggested by a friend. I was amazed at the inconsistancy in my reports. There were a couple of companies claiming I owed money to and I called each one. I dogged them until they provided as much information as possible. One entry that bothered me was for a bill I had paid off years ago. I let the credit card companies research and haggle for me and they were successful. It helps if you have any paperwork filed away! All in all, I saved myself a lot of money in bills I might have just paid had I not taken the time. I also boosted my credit rating! This is definitely well spent time! Misinformation is not uncommon on these reports.

  6. EHadden says:

    If I stagger the reports by 4-months, does that count as ordering 3 reports in a one-year time frame? Or do I get to order one report from each of the companies once a year?

  7. pfadvice says:

    “If I stagger the reports by 4-months, does that count as ordering 3 reports in a one-year time frame? Or do I get to order one report from each of the companies once a year?”

    You can order one report from each company during the calendar year for a total of 3 reports total. You don’t have to get all three reports at the same time.

  8. Sue says:

    I have kept up with the challenge……….love it. Feels so right, January, New Year & such.

    I didn’t find any glaring errors, but was amazed at 23 open accounts. Only a handful that have had any activity in the recent years………but 23! Seems like a bad idea to me, and I had already decided in my head to call & close out some of the antique ones. But, then I read here in the forums, that the number of accounts & the ones that go back years are actually good?? So, I’ve left them alone, against my little voices telling me to clean this up!

    I did make some big changes the other day on the charge cards I have. I was also amazed to see the total of all 3 cards. TOO MUCH! I’m paying the worst one off first, per the directions of the challenge. Then, have a new card coming with the zero % interest for transferred balances……….think I can get that one paid off in a year……and then I’ll just have the one I use anyway. Will commit to paying it off monthly. Feels so good!!! Thanks much for the push in the right direction.

    Can’t wait for the next daily challenge!

  9. Gloria says:

    This is a good idea. It really does help and it its about time for me to do it again so thanks for the reminder.

  10. flash says:

    While there is a benefit to having open lines of credit with no balance, there is a risk assessed against ancient accounts with no activity. This is my DH’s expertise, not mine, but even for id theft risk, close the old accounts. Not just shredding the card (who can find them?) but canceling.

    Newer accounts that show a credit line and a history of payment, and lack of use, are a benefit to your credit. Again, my DH’s expertise, but we have a great credit score, so I trust his knowledge.

    Jeff, nice challenge. I wasn’t here for the previous daily’s, but these are great!

  11. flash says:

    Regarding names, it is very important. My DH’s first and surnames are identical to a person with very bad credit, and other history, and DH is extremely careful to use his full name on anything involving credit and finances.

    Another thing to consider…his name is identical to his father’s, and mine to his mother’s (no kidding). While we were poverty grad students, his parents were denied credit when their id’s were confused with ours.

  12. JiggaDigga says:

    Great reading, keep up the great posts.
    Peace, JiggaDigga

Leave a Reply

Your email address will not be published. Required fields are marked *