Another entry on my annual To-Do list is to pull my own credit report from AnnualCreditReport.com. You can get a free credit report from each of the big three bureaus: Equifax, Experian and TransUnion. It’s actually free, and does not harm your credit in any way. See video below.
In my 10+ years as a landlord, I have run many an applicant’s credit report. I found that not all people with bad credit are irresponsible, but most irresponsible people have bad credit. Which group do you want to be in?
What has infected many in all groups, is a small medical claim that has gone to a collection agency. It’s the chickenpox of credit reports – a lot of people get it and it’s very frustrating until it’s gone.
One Collection ~ 100 Point Drop
Last month, I was consulting a couple about refinancing their home. They had virtually the same joint bank accounts and credit cards. The only difference was the wife had a $93 medical claim that had gone to a collection agency. Her credit score at the bureaus was lower than her husband’s by 62, 63 and 99 points.
A friend just tried to refinance his home and discovered a brand new $92 medical collection on his report that dropped his score by 100 points. This raised the interest rate that he could get, which would cost him thousands. He spoke to the collection agency, paid it off, and was assured that will be withdrawn from his credit report.
FTC: Bad Credit = Bad Driver
Even if you are not looking to buy a house, refi, or rent, your credit report gets pulled by other folks. Some employers will check your credit report. The Federal Trade Commission (FTC) found that drivers with lower credit scores posed a greater risk than those with higher scores. See page 20 of the report. So, a lower credit score probably means you’ll pay more for car insurance.
This is what I suggest:
- Make sure you have the ability to print to PDF. I have used the freeware PDF Creator on my PC for years. I don’t know about Mac, but I hear they do everything under the sun.
- Go to AnnualCreditReport.com and print a PDF of your report from each of the three credit bureaus. You can only see your report while signed in. If you close the window, you will not be able to access your report for another year – unless you pay for it. So, print to PDF and save it for future reference.
- You can also call 877-322-8228 if you don’t want to type your personal information in a secured connection. Instead, they will have your personal information run the gauntlet of the U.S. Postal system and hope that it doesn’t get stolen out of your mailbox. Can you tell my preference?
- Look for errors.
Another FTC study was released last week. 25% of consumers found errors on their reports that might affect their credit scores. 20% of consumers had an error that was corrected after a dispute on at least one of the three credit reports. 80% of consumers who filed disputes experienced some modification to their credit report.
This seems to contradict the 60 Minutes story from a couple weeks ago, about how tough it is to get the big three credit bureaus to change mistakes on your report.
If your report has errors, get to the root of the problem. I suggest you contact the merchant or collection agency to pay it in full and have it removed. Otherwise, get used to seeing it for about 7 years.
Here is my video from 2011 about this stuuuuff: