It’s the beginning of the New Year and you have already made your New Years resolutions. As mentioned in a previous blog, an estimation of 58 million people were expected to make a financial resolution on New Years Eve. In lieu of making this financial decision there is one really important step often forgotten—a FREE credit report. As of June 1, 2004 all states had Congress pass a bill that individuals are allowed to have one free credit report a year. There are three credit bureaus, Experian, Equifax, and Trans Union, of which an individual is allowed one FREE credit report from each per year.

There are six main reasons as to why you should take advantage of an annual FREE credit report. They are as follows:

• To check for any discrepancies that may be lowering your credit score and hindering you from obtaining credit - Creditors will sometimes make a mistake when reporting your credit history to the bureaus. All it takes is a simple letter and some proof to fix it.

• Identity theft – Often people won’t even know that they have been hit with identity theft until they are denied credit due to the debt and unpaid balances. Anyone can get a hold of confidential information, such as mail that has been thrown away, to pick up bits and pieces of your credit card info. Thievery is very serious and can hurt you pretty bad. It is important to look at all open accounts and debt amounts carefully when going over your report.

• To have knowledge of all open accounts under your name – This is nice to know to prevent fraud. If you have any credit cards that you think were closed years ago you could be wrong. Check all open accounts and balances to make sure everything is up to date.

• Inquiries – These are pings on your report from creditors checking your report too often. Too many inquires show that you are looking for credit and can affect your credit score. Companies can deny you credit if they see that too many inquires have been made. It is illegal for someone to check your credit report without your permission so by obtaining your free credit report you can see exactly who is tapping into your report and take appropriate precautions in repairing the credit.

• Tracking your payments – On time payments will affect your score in a good way; however, late payments will do the opposite. If you are one of many who send checks through the mail, know that a simple delay in the mail can affect your score. Check your report to make sure all payments are on time. If you see that there is a payment that has been made late and you know for a fact that you sent it on time, go through the appropriate steps in repairing that discrepancy. It is easy to make a mistake and often your own creditors will make them.

• Your credit score – Your score can range from 300 to 830. When setting financial goals, it will be beneficial for you to know where you stand to help you reach your goals.

I can’t even tell you how many stories I have heard where people are denied credit and then when they check their report they find discrepancies that could have been taken care of long ago. Start this New Year off with a clean slate by checking your annual FREE credit report, fixing any discrepancies that may be on it, and setting goals based on your history.

This entry was posted on Wednesday, January 4th, 2006 at 6:37 pm and is filed under Credit. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.