When a consumer is given the opportunity of receiving a free annual credit report, that chance can prove to pay them back time and time again. The rating associated with the consumer’s past bill payments, debt to income ratio and habits is what lenders use to determine the interest rate assigned to new loans and refinance loans. These ratings can also be used when establishing new cell phone, alarm system, phone, cable, electric, gas and auto insurance rates.
There are three main credit bureaus that keep constant track issued by lenders. These are Equifax, Experian and TransUnion. Each of these companies allows the consumer to run a free annual credit report every 12 months. That means the consumer can pull three free reports every year to keep track of their standing.
When the consumer pulls their own file, there is no negative impression on the score or rating, however, if the consumer allows a third party to run a check, this can negatively impact the consumer’s score. A free annual credit report can help the consumer watch out for changes on the report, incorrect reporting and track score in order to qualify for lower interest rates.
When a consumer understands their standing, they can choose when to apply for loans and when to wait for a better rating to assure approval and the lowest rates available. Saving just 1% on a home loan can account for thousands of dollars over the life of the loan. In some cases, incorrect information found on the credit file can be corrected which can greatly affect the interest rate on future loans. It takes time to correct these mistakes, so the application for the loan should wait until the new credit file shows the proper corrections and the credit score has been adjusted.
Discrepancies on the Yearly Report
If there are discrepancies or incorrect entries found, the consumer can simply contact the credit reporting agency and file a complaint. The complaint will be researched and the agency making the false claims contacted. The consumer will need to have supporting documents on hand to verify why the entry is incorrect.
The New Power of the Report
In recent years, the free annual credit report has offered more than just credit watching to the consumer. Employers are not using the report to gauge worthiness for jobs. If the applicant has severe infarctions on the report or a very low score, the employer may choose to pass over the applicant for another, less qualified individual, based simply on credit rating.
If a job offer is contingent upon the information reported by a credit reporting agency, the consumer needs to see what the employer will see, before they see it. A free annual credit report can be accessed immediately, in most cases. Some companies choose to include a free credit score along with the free report. Other companies may charge a small fee when the free report is delivered to include the score.