KNOW YOUR NUMBER: GAIN FINANCIAL HEALTH BY BEING INFORMED

Information is power.

Information is also freedom.

When it comes to your finances, the more information you can get about your credit history, the quicker you will be able to obtain financial liberation.

Your credit history is accessible by hundreds of thousands of companies throughout the United States. Oftentimes, these agencies know more about your credit history than you do. Too many people apply for a credit card or a home loan only to realize that the information on their credit report is incorrect or that they aren’t as financially healthy as they thought. At this point, it’s too late. Without a strong credit report and good credit score, you will be forced to pay higher interest rates or your application for a loan will simply be denied.

Routine credit checks are as important as routine check-ups at the doctor. You get your blood work checked so that there aren’t any surprises when it comes to your physical health. The same applies to your financial health. What if your credit card company incorrectly reported that you were late on a payment? Worse yet, what if you’ve been the victim of identity theft?

The only way to protect yourself, is by having the right information.

Get the Right Information

Even though your credit report is a snapshot of your financial history and is based off fact, there are still variations. This is because even though the credit bureaus all collect the same type of information on you, they may not collect the same specific data at the same time, from the same lenders. In fact, not all lenders provide information to all the credit bureaus.

When it comes to your credit score, there are even more variations. All credit scoring companies analyze the same factors of your credit history (how much debt you have, how many credit card accounts you have open, etc.), but they all apply these factors differently when coming up with a score that rates your credit risk.

To put this into perspective, there are more than 100 different credit scoring formulas. Even the FICO (the most widely used scoring company) has multiple versions of its own score. These variations often lead to different credit scores from different credit bureaus or lenders on the same exact day. This is why it is imperative that you get all the information that you need and that it’s the right information.

When it comes to your credit history, get reports from all three of the major credit reporting bureaus: Equifax, Experian, and TransUnion. Only by analyzing the information contained in each report can you be certain that your credit history has been recorded correctly and that you are in good financial standing with each agency. For the most accurate credit score, order the FICO. The FICO is the score most lenders will use to assess your financial health.

Where to Get Your Credit Report FREE

In 2003, The Fair Credit Reporting Act (FCRA) was enacted. Before this Act, an individual’s credit history was pretty much a mystery guarded by the reporting agencies. Fortunately, the government realized the value in giving people easy access to their credit reports. The FCRA requires Equifax, Experian, and TransUnion to provide all consumers with one free credit report per year. All you have to do is ask.

To get your free reports, visit www.annualcreditreport.com. The site is secure, very easy to use, and provides helpful information about improving your credit standing. To access your reports, all you need to do is fill out a quick form which asks identity-related questions and then select which credit bureaus you want to use. If you select all three (which you should), you will need to answer additional security questions at each reporting agency’s site. Once the reporting agency has verified your identity, your report will be generated for you to download or view online.

Where to Get Your Credit Score

Unfortunately, the FCRA does not give you access to your credit score. For this knowledge, you may have to pay. Some credit card companies will allow you to see your credit score (or one of them, at least) every month as part of their services. Some of these include Chase Slate, Discover, and Barclay Card. If you don’t have one of these cards, you can order credit scores and reports from each of the reporting bureaus from MyFICO.com for $19.95 each.

The benefit of using this service is that the bureaus will provide you with multiple credit card scores – the formulas used most commonly by lenders. MyFICO has other benefits. The service offers a credit simulator feature that allows users to change factors in their credit history to see how their credit score would be affected. This is particularly helpful, for instance, if you are considering applying for a new credit card but are concerned it could negatively impact your score. MyFICO will also estimate the rates you would receive from various lenders based on your credit history.

It may seem foolish to purchase this service when consumers can get their credit report for free annually. However, a lot can change over a few months. If you’re trying to improve your credit rating, or if you’re planning on applying for a new line of credit, you need to have up-to-date information about your credit history. Sixty dollars is a very affordable investment when it comes to your financial health.

Credit Monitoring Services

Another option is to sign up with a credit monitoring service. As the name implies, credit monitoring services will perform routine checks on your credit history and alert you of any changes or suspicious activity. There are many credit monitoring services online, including LifeLock, PrivacyGuard, and IdentityGuard.

These companies will often entice you with offers of free credit reports or scores, but they are not truly free. Once you sign up, you will be required to pay for the monitoring services. Despite the cost, if you are currently working to improve your credit rating, or if you’ve been the victim of identity theft, signing up for a credit monitoring service may be a good idea.

Protect Your Information

Knowledge is your most powerful tool when it comes to securing your financial health. But this knowledge – your personal information – is also coveted by some very dangerous individuals. Some of the most successful identity theft scams happen when people are trying to be the most responsible.

When you request your credit report or score, you will be required to release your name, address, and social security number– all the information needed to steal your identity. Therefore, be sure that if you select a company not recommended here, it is a reputable company. Only release your information over a secure internet connection and never do it from a public computer.

Your information is power – don’t just give it away.