You’ve finally saved up enough money for a sizable down payment on a new car, and now you’re prepared to shop around for a loan to cover the rest of the cost. But before you head out the door, it would be wise to first pull up your credit report.
Why?
You want to be sure that the report accurately reflects your credit history and that there’s nothing in it that could impact you getting the loan. If it contains inaccuracies that you were unaware of, that could jeopardize your dream of owning a new set of wheels.
Credit reports are a key resource used by banks, insurers, and other businesses to evaluate applications for credit. The reports contain such information as how you pay your bills, whether you pay them on time, and whether you’ve filed for bankruptcy or been sued.
While businesses have to pay to access credit reports, you can obtain yours for free once a year. A federal law known as the Fair Credit Reporting Act (FCRA) requires each of the nationwide credit reporting companies — Equifax, Experian, and TransUnion — to provide you with free reports upon your request.
FCRA is intended to promote the accuracy and privacy of information that’s on file with these credit reporting companies. That information might include what credit card accounts you have opened and whether you pay your bills on time.
So suppose you discover an inaccuracy in one of your credit reports, such as a credit card account that appears to still be opened even though you closed it several years ago? You need to contact the agency that issued the report to correct the error. Otherwise, that mistake could haunt your credit worthiness.
Another benefit of reviewing your reports on an annual basis is to guard against identity theft. Someone who’s stolen your identity could be making purchases or opening credit card accounts in your name. If that would occur, your report might show it, and you could take steps to block future fraud.
You can order your free reports through a central website – annualcreditreport.com. Or you can call 1-877-322-8228. There is also a request form that you can fill out and mail to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.
Reports ordered online should be accessible immediately on the website. For requests made by phone or by mail, the report should be mailed to you within 15 days.
Credit reports can be ordered one at a time from each of the credit reporting agencies. Or you can order reports from all three agencies at the same time. The choice is yours. But the important thing is to access them every year so you know where your credit stands. It could mean the difference between getting that new car or being stuck with your old clunker.