How Often Should You Check Your Credit Report?
Errors in credit reports are a persistent problem, exacerbated by the pandemic, and the number of complaints about errors from credit bureaus is at an all-time high of 86% compared to last year. To be on the safe side, check your credit reports every three months, especially if you plan to apply for a loan or fund a major purchase.
What’s happening?
Simply put, the three major credit reporting agencies ( Equifax , Experian, and TransUnion ) serve the interests of banks and other lenders, not individual consumers. For this reason, errors in credit reports were already a problem, as Aaron Klein, director of policy at the Brookings Institution, explains for Consumer Reports:
“Banks and lenders pay credit bureaus to prepare reports, so their incentive is to create large amounts of data quickly. Improving the accuracy of reports would be costly and time consuming, although it would be beneficial for consumers. “
Unfortunately, amid the pandemic, the problem has only worsened as confusion over mortgages and student loan refusals has led to more errors in credit reports.
To make matters worse, these errors are not easy to fix, and trying to do so can require a lot of controversy with the agency in question. This is a problem that President Biden wants to solve by transforming lending agencies into a more transparent public directory operated by the Consumer Financial Protection Bureau.
How unfixed bugs can hurt you
Mistakes can lower your credit rating, which in turn limits your ability to qualify for funding or loans, especially those that offer decent interest rates. Common mistakes include repaid loans that look like unpaid loans, incorrect personal information, and debts mistakenly recorded as being foreclosed. And, as mentioned, some lenders recently reported federal-funded mortgage and student loan borrowers as late payments, despite the disbursement moratorium imposed by various COVID relief plans. For these reasons, you will want to be more vigilant and check your credit reports regularly.
How can I check my credit report?
You can request free credit reports from each of the three credit bureaus at Annualcreditreport.com (usually you only get one free report each year, but the special provision related to the pandemic allows you to get them free of charge every week until the end of April 2022) …
You will be asked some financial questions to verify your identity, so you will want your financial statements to be at your fingertips at all times. After receiving the report, view it line by line. Look for errors and double-check to see if it contains accurate personal information, as simple typos are surprisingly common.
How can I dispute the error?
To avoid new mistakes, it is best to write a letter of non-compliance to the appropriate bureau, preferably by registered mail, with a receipt acknowledgment. (The CFIB has letter templates that you can use here ). Be sure to attach copies of documents supporting your complaint, such as receipts or pay slips. Usually credit bureaus have to respond to complaints within 30-45 days, but this has also been delayed due to the pandemic.
How often should I check my credit reports?
Since you can check your credit score every week for free without damaging your credit score, it is recommended that you do this regularly. At a minimum, you should do this once a year. It is generally a good idea to review your credit on a quarterly, if not monthly basis, especially if you plan to apply for funding or a loan in 2021.