The major credit card data breach that occurred in December is still making news, with more than 100 million people possibly affected. With the heightened attention to the vulnerability of financial data, it’s a good reminder to periodically check our credit reports for errors and fraudulent activity. Errors can lower our credit score, which might result in less favorable terms or being denied credit, while fraudulent activity can indicate identity theft.
There are three credit reporting bureaus: Equifax, Experian, and Transunion. Every company that accesses a person’s credit information uses one of the three. It’s critical to check each one, as they often contain different information. You can check your credit report once a year for free or anytime someone denies you credit.
To make it easy, the starting point to check all three is Annual Credit Report.
While it’s tempting to look at all three at the same time each year, a wiser solution is to check one of the three every four months, sequencing between the bureaus. This means we can catch and fix potential problems much sooner.
Married couples need to check both names, as each spouse has a separate credit file. This results in six files to check annually (three for each person). To be extra diligent, check one of the six reports every two months. That’s what I do.
The first time I checked our credit reports, I found a mortgage reported as outstanding even though we paid it off twenty years prior, several credit cards we had closed but still showed open, an address we never lived at, and even an incorrect alias for my wife. It took a lot of effort over several months to correct all the errors, but I’m glad we did. Now all I need to do is check on a regular basis to make sure no new errors creep in.
Now, after that initial check and correction of errors, it doesn’t take me much time to recheck each year, yet it still seems like a hassle. However, dealing with denied credit or identity theft after it’s been brewing for a while would be a much bigger hassle.
[This is from the January 2014 issue of Peter DeHaan’s newsletter. Sign up to receive the complete newsletter each month via email.]