When to Access Your Free Credit Report

Gregory J. Cook, EA, CPA+ Accredited Tax Advisor Past President Alabama Society of Enrolled Agents Past President Alabama Association of Accountants

When to Access Your Free Credit Report


Americans are entitled to a free credit report every year from the three major credit bureaus, thanks to a law that was enacted to keep consumers informed about their credit rating. This can be especially useful to you when you are preparing to make a large purchase, applying for a loan, or you just want to make sure everything is accurate. Be sure to take advantage of this right that you have as a consumer. You want to catch any errors before it is too late, and making changes to your credit report can often be time consuming and frustrating.

It is absolutely essential to access your free credit report before you apply for a large loan, such as a mortgage. Checking your credit is the first thing that a lender will do when you apply for a home loan. Any negative items on there will count against you, and make your mortgage more expensive. Really bad credit reports may disqualify you from a home loan entirely. Check your credit before you even meet with the loan officer. Do the same thing before you go shopping for a new car, when you will need to apply for financing. You want to avoid the surprise of higher interest rates and down payments due to bad credit.

Perhaps you are not buying a home, but planning to rent one. Most property managers, apartment complexes, and rental agents will check your credit when you fill out a rental application. Obtain your free credit report ahead of time so you can be prepared to explain any blemishes that might show up in your credit history. Most landlords will review your credit to make sure there are no evictions, bankruptcies, or foreclosures on there, but late payments or outstanding debts on other accounts might make them less willing to rent you a home or apartment.

Employers are becoming increasingly more likely to run your credit when you apply for a job. This is especially common in the financial industries. If you apply for a job at a bank, brokerage, insurance company, or other place where you will be dealing with money belonging to the company and its customers, be prepared for a credit check. Take a look at your free credit report ahead of time, and make sure everything is factual. Some employers worry that a prospective employee who has a lot of debt or difficult financial issues will be a liability, and is less trustworthy around other people's money.

If you notice an error on your free credit report, take action immediately. Contact the credit bureau, and make sure you follow all of the steps they require you to in order to get the problem rectified or removed. You will probably have to contact the bank or lender that is reporting the misinformation in order to get it cleared up. Check your credit at least once every year to make sure it is consistent and correct. Constant vigilance is also a good way to prepare for the future, and to guard against identity theft.