Free Annual Credit Report Guide (Including FAQs)

If you have a credit card, a personal loan, or car loan, you probably have a credit score. But do you know what it is? If you don’t, you should. If you do know, do you know why it’s important and how it can affect different aspects of your life? Here, we’ve gathered basic information about credit scores and how to get them without being scammed or compromising your personal information. It’s important to realize your credit score is always changing, so even if you knew what it was at one point in time, it’s important to check it regularly. We’ve also answered frequently asked questions regarding credit histories and scores. After reading all the information included here, you’ll have a chance to see if you qualify to get your free annual credit report now.

Why You Should Know Your Credit Score

There are many reasons you should be aware of your credit score. When you learn what your credit score is, it’s important to realize it’s just a snapshot of your credit worthiness at a certain point in history. If the score is great, you need to keep doing what you’re doing and the score will increase even more. If it’s less than stellar, you should research ways to make it better.

One common misconception is if you don’t need credit cards or need to take out a loan, you don’t need to worry about your credit. This simply isn’t true. If you don’t take steps to build your credit history, you won’t have any. In some situations, having no credit history is just as bad as having none. If you haven’t established a credit history, you may have to pay deposits for utilities, be denied housing applications, and even struggle with getting approved for an emergency credit card. On average, it takes six months of credit usage for a person’s FICO score to be established. Increasing your score takes time and good financial practices. Paying bills late, missing payments, or failing to pay installment loans all reflects poorly on your credit report. In general, your score can fall much faster than it can increase, so it’s best to avoid dings to your credit history as much as possible.

How you manage your credit and pay your bills creates patterns that lenders use to predict your creditworthiness. Your credit score is generated using five factors; payments, credit use, average credit age, account mix, and credit inquiries. While all five of these factors are used in FICO and VantageScore formulas, it’s unclear how much each factor is calculated in the score. However, everyone agrees that paying your bills on time and in full each month is the best way to increase your credit score.

One of the main reasons to keep an eye on your credit score is because it can help you spot fraud. Every time an inquiry is made regarding your credit or a new account is open, it shows up on your credit report and affects your score. When you watch your score closely, you’ll notice these changes right away, and address any suspicious or fraudulent activity immediately.

It’s also important to know your credit score because it affects you in ways you probably don’t even know. In fact, your car insurance premiums weigh heavily upon your credit score. Many employers will also pull a credit report on potential employees. If an employer orders an applicant’s credit report, they will not get a person’s score. Instead, they will just get a copy of their report such as balances, accounts, collection activity, and whether there are any judgments against the person. Employers cannot pull a credit report on a current or potential employee without the individual’s permission. Lastly, the higher your credit score, the more likely you are to be offered loans and credit cards with low-interest rates. When compared to a loan with high-interest rates, you could save thousands in reduced interest payments just by having a high credit score.

It’s also important to know not all credit scores are the same. There are many different models used by credit reporting agencies. However, the most popular models used to determine a person’s score is the FICO model and the VantageScore. FICO scores have long been regarded as the industry standard. The scoring model was introduced nearly 25 years ago and is the go-to for lenders all over the globe. Today, many lenders still use the FICO model, and others have turned to using the VantageScore exclusively. The VantageScore was a model used to calculate a person’s credit score that was created by the three main credit reporting agencies.

Three Main Credit Reporting Agencies

There are hundreds of websites advertising free credit reports, credit monitoring, and related services. But, it’s important to know there are only three major credit reporting agencies; Equifax, Experian, and TransUnion. Moreover, each of the three organizations listed previously work independently of each other. Each of these for-profit agencies compiles details about a person’s credit history and provides it to potential lenders who evaluate an applicant’s risk of defaulting on a loan. Contrary to what many believe, the three most important credit reporting agencies are all privately owned and not funded or run by any government. However, the Federal Trade Commission and other government agencies do have policies regarding services offered at these types of companies.

Equifax is the oldest of the three credit reporting agencies. To date, the company has 800 million consumers and offers its services to 88 million businesses. The public company was founded in 1899 and has its headquarters in Atlanta, Georgia.

Experian is the newest of the three companies. It was founded in 1996 and has headquarters located in Dublin, Ireland. Other offices for the public company are located in London and Costa Mesa, California.

TransUnion is the 3rd largest of the agencies and was established in 1968. To date, the company works with 45,000 businesses and 500 million consumers. Its headquarters are located in Chicago, Illinois.

How to Tell If a Credit Reporting Service Is Legit Or A Scam

Since 2005, customers have been interested in monitoring their credit to prevent identity theft. Unfortunately, scammers have taken advantage consumers need to monitor their credit and defrauded them out of money and even stole their personally identifiable information. Scammers can gain information needed to steal someone’s identity and create new accounts by targeting people looking to protect exactly what it being stolen. As these frauds, have been uncovered, more people are asking how they can tell if a credit reporting service is legit or a scam. One thing to look for is whether the service provides you with credit reports from all three agencies; Equifax, Experian, and TransUnion.

If the service provides you with a report from each of the agencies, it is probably legit. If you are asked to pay for services, you should exit and rethink your choices. The Federal Trade Commission also encourages consumers to make sure they choose how they get their reports carefully. Click here to get our recommended source to get your free credit score now.

AnnualCreditReport.com Review

AnnualCreditReport.com is the only website recommended by the Better Business Bureau to those looking to order their free, annual credit report. When searching for the site only, it is imperative to make sure the URL is spelled correctly. As mentioned above, the FTC warns consumers of dozens of imposters who have URLs very similar.

AnnualCreditReport.com is a reputable choice as its creation and ability to deliver an annual free credit report was directed by Federal Law. Every person is entitled to an annual credit report, and the website was set-up by the three big credit reporting agencies; TransUnion, Experian, and Equifax.

FAQs

Q: Is it safe to get an annual credit report?

A: Inquiring on your credit report is a “soft” inquiry, which doesn’t affect a credit score. In comparison, if a lender makes an inquiry into your credit history, it shows as a “hard” pull and affects your overall credit score.

Q: Can I get a credit report without it hurting my score?

A: Yes, if you only get a report once per year, it shouldn’t negatively affect your score. More often than that, and it might.

Q: I can get a credit report without a credit card?

A: Yes, but some services will charge a fee to set up an annual report

Q: How do you dispute inaccurate information on a credit report? 

A: Examine each credit report from the three leading agencies. Report any discrepancies to the company that provided the information. TransUnion, Experian, and Equifax, all have policies on how and when a consumer should report any inaccurate information on their credit report.

Q: Can a person’s credit history be transferred from one country to another? 

A: Unfortunately, there are many reasons a person’s credit history in one country cannot be transferred to another.

Final Thoughts

Everyone needs to know what their credit score is and what information is on their credit report. The consequences of not knowing your credit score is expensive and can even lead to your identity being stolen. The last thing you need when you’re trying to build good credit history, repair your credit score, or just maintain a high rating, is to be taken advantage of by agencies you want you to pay for services that others offer for free. Do your research and get your credit score from a company you can trust. Click here to see if you qualify to get your credit report for free today.