Grabbing your credit score: Three things you should know
What’s your credit score?
If you’re not entirely sure, it’s probably time to pull your credit report. And yes, it really is free, and yes, requesting it won’t hurt your credit score.
Three things you should know about credit reports:
There’s only one safe website, so beware
The Federal Trade Commission makes clear: “Only one website is authorized to fill orders for the free annual credit report you are entitled to under law — annualcreditreport.com. Other websites that claim to offer ‘free credit reports,’ ‘free credit scores,’ or ‘free credit monitoring’ are not part of the legally mandated free annual credit report program.” Further, FTC notes, “some ‘imposter’ sites use terms like ‘free report’ in their names; others have URLs that purposely misspell annualcreditreport.com in the hope that you will mistype the name of the official site.”
Under law, you’re allowed to order reports from each of the three credit reporting companies (Equifax, Experian and TransUnion) once every 12 months.
An FTC report found that 26 percent of consumers surveyed “identified at least one potentially material error on at least one of their three credit reports.” So it’s worth checking it often. If you find an error, the FTC recommends that you:
1. Inform the credit reporting company, in writing, about the inaccurate information; and
2. Tell the “creditor or other information provider in writing that you dispute an item.”
The FTC adds: “. . . credit reporting companies must investigate the items in question — usually within 30 days — unless they consider your dispute frivolous. They also must forward all the relevant data you provide about the inaccuracy to the organization that provided the information.”
Soft vs. hard inquiries
Experian explains that there are two types of credit inquiries: “[R]equests viewed by others [soft inquiries] and requests viewed only by you [hard inquiries].” They add: “When you request your own credit report and/or credit score, the inquiry is listed under ‘requests viewed only by you.’ They are not included in the data provided to creditors so they cannot be scored. These inquiries are only seen by you. For that reason they are often called ‘soft’ inquiries.”
Consumers often “hesitate to check their credit report,” says Equifax, “because they don’t want to impact their credit score. While pulling your credit report does result in an inquiry on your credit report, the good news is that it will not negatively affect your credit score…hard inquiries do whereas soft inquiries do not.” Equifax says that hard inquiries remain on your credit report for 24 months.
Also worth knowing:
· Three at once? – Should you order all three reports at the same time? Perhaps, but the FTC notes: “Some financial advisors say staggering your requests during a 12-month period [that is, ordering one report from each agency every four months] may be a good way to keep an eye on the accuracy and completeness of the information in your reports.”
· Timing – if you’re ordering your report online, you’ll have access to it immediately; if ordering by phone (877-322-8228), your report will be mailed within 15 days.
· Building a solid credit history – Equifax offers three tips: 1. “Don’t request too much credit at once;” 2. Avoid making late payments; and 3. Avoid high balances on your credit cards.
Overall, we find that 26 percent of the 1,001 participants in the study identified at least one potentially material error on at least one of their three credit reports. Although 206 consumers (21 percent of the participants) had a modification to a least one of their credit reports after the dispute process, only 129 consumers (13 percent of participants) experienced a change in their credit score as a result of these modifications. Each affected participant may have as many as three score changes. Of the 129 consumers with any score change, the maximum changes in score for over half of the consumers were less than 20 points. For 5.2 percent of the consumers, the resulting increase in score was such that their credit risk tier decreased and thus the consumer may be more likely to be offered a lower auto loan interest rate.