Five percent of consumers who checked their three major credit reports found errors that were serious enough to affect their credit scores, according to a recent Federal Trade Commission study. As a result they could be paying more for such products as home mortgages, auto loans, and insurance than they should, or they might be denied credit altogether.
The study, which was mandated by Congress, involved about 1,000 participants. It shows why checking your reports and disputing any errors you find is critical. More than one in 10 consumers saw an improvement in their credit score after they disputed mistakes and the credit bureaus modified their reports.
What to do. The Consumer Financial Protection Bureau reports that only about one in five people check their credit reports annually. Don’t be one of them. Examine your reports from all three major credit reporting agencies—Experian, Equifax, and TransUnion—at annualcreditreport.com. You’re entitled to one free copy of each report every 12 months. To monitor your information all year long, get a free report from one of the three credit reporting agencies every four months.
Some lenders and insurers use reports from other specialty credit bureaus. Some of them must give you one free report annually if you request it, while others can charge a fee unless their report resulted in an adverse action against you.
To identify and obtain specialty credit reports, check this list of about 40 specialty bureaus (PDF) created by the CFPB. Check your reports from these bureaus when there’s a specific reason to—for example, when you’re applying for insurance.