Updated June 14, 2013

Credit Check: Review Your Credit Report

Every American Should Conduct an Annual Review of His or Her Credit Reputation
Read more about Best Credit Cards

Informed consumers who take action to protect their individual financial interests and their credit records are the bedrock of a healthy American economy. Our educational infographic helps consumers conduct a basic annual credit health self-assessment to protect one of their most valuable financial assets: their good name.

(Click Image to Enlarge)
Infographics: Credit Checkup
Infographics: Credit Checkup © CreditDonkey

Knowing your credit is the first step to improving your personal finances.

Yet, far too many Americans remain in the dark when it comes to knowing their credit and this can have negative implications on their interest rates, how much they pay for loans, and even their employability.

Despite about $2 trillion dollars worth of credit card transactions running through the largely digital American banking system, only about 16 million people a year out of about 183 million credit cardholders in the U.S. take the most basic step to protect themselves from fraud and their financial reputations by requesting a free annual credit report directly from the three nationwide credit reporting agencies, according to the newly established U.S. Consumer Financial Protection Bureau and the U.S. Census Bureau, respectively.

While additional consumers may be purchasing or reviewing other types of credit reports - some of which may be of questionable merit - the number of people asking for the readily available, free information they are entitled to from the three credit reporting agencies that produce nearly all of the credit reports sold to banks and other lenders in the U.S. is just a fraction of those who use credit cards or apply for mortgages or installment loans each year.

“One thing we all should have learned from the Great Recession and the housing bubble is that consumers must police the economy at its transactional foundations and must have access to the knowledge and data they need to act responsibly in their own interest,” said Charles Tran, founder of CreditDonkey.com.

Review our infographic above for tips to keeping tabs on your credit health.

  • Free Credit Report: Under the Fair and Accurate Credit Transactions Act (FACT Act), consumers are entitled to access a free credit report from each of the three credit reporting agencies - Equifax, Experian, and TransUnion - once every 12 months. The three nationwide credit reporting agencies operate a single web site, AnnualCreditReport.com, which is the only authorized online source for free credit reports.

  • Identity Theft: An important way to protect against identity theft is to check your credit report periodically. You can request a free annual report from all three credit reporting agencies at the same time or stagger them throughout the year.

  • Mistakes: Credit reports can contain mistakes. While the FTC is currently conducting a study on the accuracy of credit reports, according to a report by the U.S. Federation of State Public Interest Research Groups (PIRGs) one out of four credit reports contains a serious error that can adversely impact your credit. Look for evidence of identity theft or activity that is not yours. All lenders do not necessarily report to all three credit reporting agencies, so errors may appear on one report but not on others.

  • Correct Errors: To correct errors on your credit reports, contact the credit reporting agencies in writing and provide copies of the documents to support your assertion. Credit reporting agencies must investigate claims unless they consider the dispute frivolous.

  • Negative Information: Information on your credit report that is accurate can only be removed with the passage of time. For example, credit delinquencies will stay on your credit report for seven years and bankruptcy information will stay on your credit report for 10 years.

  • Credit Scores: These scores represent, in theory, your creditworthiness - the likelihood that you will pay your debt.

  • Multiple Scores: Many of the scores calculated for and used by lenders are not available to consumers. Credit scores influence the marketing offers consumers receive. Credit scores are likely to vary based on different scoring methods and differences in the data available. Consumers unaware of the variety of scores may purchase a score believing it is their “true” score, when in reality the score that lenders see is quite different.

  • Think Carefully Before Consolidating high credit card debt through a second mortgage or home equity line of credit because most credit card debt is considered “unsecured debt” while mortgages and home equity loans are “secured debts” that require you to put up your home as collateral. If you cannot make the payments on secured loans, you could lose your home.

  • Credit Counseling: If you get into credit trouble, consider contacting a reputable credit counseling organization such as one offered by a university, military base, housing authority, or branches of the U.S. Cooperative Extension Service.

(Writing by Annette; Graphic Design by Marco)

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Follow @CreditDonkey or write to Annette O'Connor at annette@creditdonkey.com

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CreditDonkey is a credit card comparison website. We publish data-driven analysis to help you save money & make savvy financial decisions.

Editorial Note: Any opinions, analyses, reviews or recommendations expressed on this page are those of the author's alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.

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CreditDonkey does not know your individual circumstances and provides information for general educational purposes only. CreditDonkey is not a substitute for, and should not be used as, professional legal, credit or financial advice. You should consult your own professional advisors for such advice.