Illustration by Blake Cale
What you need to know:
Average read time: ~5 minutes
How to review your credit report
Periodically reviewing your credit report and checking alternative credit bureau reports is an important first step in financial health. The FACTA (Fair and Accurate Credit Transactions Act) gives you free access to review your credit report once a year.
You can get one free credit report from each of the big three credit reporting companies every 12 months. Go to AnnualCreditReport.com or call 1-877-322-8228. Some of the credit bureaus will give you more frequent access. You can also get your ChexSystems report at ChexSystems.com and most other alternate bureaus through forms on their websites.
Once you have your report you will want to verify that all the information is correct. Data stays on your credit report for 7-10 years, so making sure it is correct is very important.
Here are a few terms you should look for:
Make sure your report is accurate and check for:
You have rights under the Fair Credit Reporting Act (FCRA), which helps ensure the fairness and privacy of the credit bureau information. It allows for you to challenge or dispute the information that is on your credit report.
If you find something wrong, you should reach out to both the credit bureau and the company that provided the information (the creditor). Explain what is incorrect and why, and include supporting documentation when possible.
Disputes can be filed with the credit bureaus either online or via mail, the CFPB has great tools to walk you through this process.
Here are a few more ways to build your credit history:
It’s a common misconception that carrying a balance on your credit card improves your score. While low utilization does help, leaving it on your card and incurring interest actually doesn’t.
What you spend on your card (the balance when the statement is generated or at the end of the month) shows on your credit report whether you pay it off in full or carry it from month to month. Paying your balance in full each month is the best financial decision and won’t hurt your score.
If you use your credit card heavily during the month, you may want to consider making multiple payments a month, so your balance is always low no matter when credit bureaus check your score.
While having diverse types of credit can improve your credit score, taking a loan that you don’t need isn’t a good financial decision. It is not recommended to borrow when you don’t need to.
|Beyond these myths, there’s so much more to learn about credit. As part of our commitment to our customers’ financial wellbeing, this financial literacy series will break down these topics. Our mission at Possible is to help you end the debt trap and unlock economic mobility for good. 🟦|
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