We have two competing issues.
On the one hand, talking about credit reports is mind-numbingly boring. On the other hand, talking about credit reports can save you several hundred thousand dollars. I mean, don’t get me wrong. I’m fond of money, but credit reports are sleep-inducing. It’s your call. Skip ahead to the next lesson, or, if you can bear it, stick with me for just a minute and learn the least you need to know about credit reports.
If you’re still reading this lesson, you are definitely a trooper. I think it’s going to pay off for you.
Here’s all you need to know:
- Your credit report shows information about you, such as where you live, if you pay your bills on time, and if you’ve ever been sued or filed for bankruptcy. This is the material the credit scoring companies use to help them figure out your credit score.
- There are three big credit scoring companies, and each of them has a credit report on you.
- You can get a free copy of your credit report from each of these companies every single year.
- There is a good chance there is an error on your credit report.
And it’s this last one that can really bite you.
A recent government study found that as many as 42 million people have an error on their credit report.
It’s like studying your butt off all semester, acing the final, but getting a “C” in the class because the professor made a typo when calculating your grade. Getting a “C” when you deserve an “A” is bad, but paying an extra $400,000 in higher interest rates and insurance premiums over your life because of an error is just tragic.
Here’s all you need to do:
1.) Get your free credit reports by going to www.annualcreditreport.com.
2.) See if you notice any accounts that do not belong to you, charges or late payments that don’t look right, or other issues you think are incorrect.
3.) Dispute anything you think even looks remotely incorrect.
How do you dispute an error?
That’s easy, too. You send one letter to the credit scoring company and you send another letter to the credit card company, bank, or whoever it is supplying the bad information to the credit scoring company. Bam! That’s it. And to make it even easier, our government provides a sample letter for each!
Okay, so aren’t you happy you stuck around for that? Yeah, I know. It’s really hard to make credit reports exciting, but what this lesson lacked in creativity, whit, and entertainment, I’m hoping it made up in cold, hard cash for you.
The proceeding blog post is an excerpt from Get Money Smart: Simple Lessons to Kickstart Your Financial Confidence & Grow Your Wealth, available now on Amazon.
About the Independent Financial Advisor
Robert Pagliarini, PhD, CFP®, EA has helped clients across the United States manage, grow, and preserve their wealth for the past 25 years. His goal is to provide comprehensive financial, investment, and tax advice in a way that was honest and ethical. In addition, he is a CFP® Board Ambassador, one of only 50 in the country, and a real fiduciary. In his spare time, he writes personal finance books, finance articles for Forbes and develops email and video financial courses to help educate others. With decades of experience as a financial advisor, the media often calls on him for his expertise. Contact Robert today to learn more about his financial planning services.