The Fair Credit Reporting Act grants you the right to get a copy of your consumer credit report every year, absolutely free. I can't even imagine what it was like before the FCRA gave everyone that right.
If someone's going to collect data about you and make credit decisions based on that information, you should have the right to review it for accuracy. Getting your credit report each year is a must. They frequently have errors and those errors can result in you paying more than you have to (or worse yet, not qualifying for a loan you should qualify for)
Before you rush out and get all the reports all that once, I want to suggest an alternative.
If this is your first time requesting your report, requesting all of them might be a good idea. It gets you to a good starting point where you know all the information is accurate. It also lets you fix any errors right now, rather than waiting until later.
If you've seen them once already, I have a better way.
You should use the Waterfall Method.
There are three major credit bureaus, so stagger your free credit reports so you can keep an eye on them throughout the year.
The three reports aren't identical since a company won't always report to every bureau. So your Experian report might be slightly different than your Equifax report, but they're going to be pretty close.
With the Waterfall Method, you still see each credit report from each credit bureau once a year … but now you get to see a credit report three times a year. If anything funny happens, you'll know about it sooner.
Due to the pandemic and the resulting CARES Act, you can now check your credit reports every single week. You don't need to use the Waterfall Method until after this aspect of the CARES Act expires. As of this writing, this benefit will last until December 2023.
The Waterfall Method
There are three credit bureaus – Experian, Equifax, and TransUnion.
There are twelve months.
I check one credit report, through AnnualCreditReport.com, every four months. Boom. Math!
Here's the schedule I use (it doesn't matter when you start):
- January – Experian
- May(ish) – Equifax
- October(ish) – TransUnion
If it's the first time you're checking your report (ever), check them all at once. You need to make sure none of them have errors. Errors are common and they take time to fix, so get on that.
Then, after a year, you can get more reports. Here's where you stagger them by four months so you get a snapshot throughout the year.
I've probably found five or six errors in the last 15 years. From random addresses (I learned this gem on a background check for a security clearance!), to accounts that weren't mine, to an extra Social Security Number! Most were easy to fix because they weren't mine, to begin with, but all of them took time.
My Reminder System
I remember to do this by setting up email reminders. I used to put it in my calendar but I found I was dismissing the reminders but forgetting to check my reports. I was far better with emails since deleting was a bigger step than dismissing a pop-up.
Also, there are specialty consumer reports you should check too and give yourself a full background check!