Year End Credit Check-Up: Have You Done Yours?

Thanksgiving is now officially behind us and the promise of a New Year is fast approaching. What better time for a little end of year financial house cleaning? Before you say goodbye to 2012, there’s one last year-end “to do” — your annual year-end credit check up.

We hear the groans already, but this one small task is so important when it comes to your credit and financial wellbeing — and it won’t cost you a dime. Plus, it’s a great tool for helping you plan and set your financial goals for 2013.

To keep it as painless as possible we’ve outlined a quick year-end credit checklist to get you started:

Claim Your Free Credit Reports

Under the Fair Credit Reporting Act, we’re all entitled to a free copy of our credit reports from each of the three major credit reporting agencies — Equifax, Experian and TransUnion — once every 12 months. To order your free credit reports, you’ll need to use the federally mandated site. Note that when ordering your free credit reports, each bureau will offer you the opportunity to purchase a credit score. However, there are two things to consider before you spend money to receive your credit score:

Before you obtain your credit score, you want to make sure your credit report data is accurate and up-to-date. Your credit score is only as accurate as the data in your credit report. Why pay for a credit score that might not be accurate?
There are free options to get the same information that work just as well as a paid version, especially if you are looking to monitor your score to build your credit.

Review for Accuracy

After you’ve claimed your credit reports, the next step is to review them to see whether what’s being reported is accurate and up to date. In the past, credit reports were confusing and complicated to understand but with the advancement of consumer awareness, they’ve become much more consumer friendly and easy to read. When reviewing your credit report for accuracy, you’ll want to look for unfamiliar or unauthorized accounts, and any late payments, collections or liens that don’t belong. Make sure all of the accounts listed do, in fact, belong to you and that the information being reported within the accounts are accurate.

You should also double-check the details in your personal information like name, address, employers, etc. Even though these sections won’t impact your credit scores, it’s important that they are accurate. Names and addresses that you don’t recognize may be red flags for possible identity theft of fraud.

Dispute Any Errors

If you find that there are errors in your credit report, you’ll want to file a dispute immediately. When you order your free credit reports, each bureau will give you an option to file a dispute. If you file a dispute, make sure you’re very specific about the error in question and include any documentation that would validate your dispute. By law, the credit reporting agencies have 30 days to investigate and resolve your dispute.

Claim Your Free Credit Score

After you have claimed your free credit reports, verified that the information is accurate and up-to-date (or have disputed any errors and had them corrected), it’s time to take a look at your credit score. Typically, you’d have to pay for your credit score but fortunately, with educational sites like Credit.com, consumers can access their credit score for free. It’s a great way to get a general idea of where you stand credit-wise and can help you pinpoint areas for improvement if needed. Their Credit Report Card service also provides free updates every month so if you’re not happy with your credit score and want to build it, you can monitor and track your progress from month-to-month without spending a penny.

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