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!
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Brian @DebtDiscipline says
A great system Jim. Always good to have periodic check ins on your report. The Waterfall methodology is often used in managing project too.
Thanks Brian, I’ve found that sharing some of my own methods in managing money has been very useful for folks so I’m doing more and more of it.
Lazy Man and Money says
If you use a calendar system like Google Calendar, you can set it up to email you each day with your agenda.
I think this gives me the best of both worlds as I can look ahead to see what’s on next Tuesday’s schedule if I need to, but also have the email for re-enforcement.
Ahhh good call, that’s a great option too.
Jenna L at Hello Suckers says
What a clever way to do it!
I’ve always found it sneaky that credit checks cost money so this sounds like a way to keep an eye on your financial situation whilst you swerve the unnecessary expenses.
I’ve been so paranoid about what pops up on my credit report I sometimes can’t wait in the time frames that you check your credit reports. I live in a State where there is a lot of fraud so I subscribe to a credit monitoring and quarterly reporting service through my bank. So if anything pops up on my credit from any of the 3 bureaus I will get immediately notified. Prior to this I was employing your method for doing credit checks. It’s a great system to have in place.
I’m not nearly as paranoid, despite having some stuff pop up on my report that weren’t mine, but an ounce of prevention is worth a pound of cure!
David of The Debt Free Guys says
Thanks for the reminder. We use this method to. I needed a nudge to make sure I do it before the end of the year. 🙂
We always need nudges! 🙂
Hey Jim great advice- thanks!
I have yet to check my score this year so I should check across all 3 to make sure they’re all accurate. My question is if you can only check for free once a year is it 12 months rolling or is it calendar year- so if I check now I can then check again for free in Jan?
What about Chex Systems for a fourth data source http://www.chexsystems.com
Jim Wang says
Chex Systems is considered a consumer reporting agency but they collect banking information. It’s good to review it but not nearly as important as the three credit bureaus.
Katie Eikenberg says
Where and how do I repair my credit with dispute letters or name that’s spelt wrong?
Jim Wang says
You can contact the credit bureaus directly for errors in your personal information – request a report and follow their procedures for that. If it’s an information source (like a credit card, etc), then go to the source and tell them they made a mistake in the reporting.
Greg DeMaio says
Many thanks Jim. I just found your website as I was looking into an alert that was on my Equifax report. I will use your method and look forward to your newsletters