How to Examine Your Credit

Kevin McCormally: I am Kevin McCormally of Kiplinger's, and I am here with Janet Bodnar, deputy editor of Kiplinger's Personal Finance magazine. Let's talk about credit reports. We know federal law now gives people the right to get a free look at the credit report. How does that work, and should you do it? Janet Bodnar: I think you should do it, and it's fairly easy. You can go online, but you've got to go to the right website, it's www.annualcreditreport.com. There are lot of copycat sites, so you want to go to the right one. Kevin McCormally: Okay, well, what would happen if you went to the wrong one? Janet Bodnar: Well, they might try to sell you something, you might not get your free credit report. They would try to sell you a lot of things that you really don't need, because they're trying to copycat off the real site. Kevin McCormally: Okay. So when you get to the right site, what do you do, how do you get to report? Janet Bodnar: Well, one of the things you're going to have to do, is identify yourself, make sure that you really are the person you say you are. You may actually get asked some questions about your own credit, your mortgage payment for example, or your columns, so you may need to have some of that material on hand, so you can answer the questions. Next thing you'll have to do is, you'll have to say which of the three credit bureaus you want to report from, there are three of them, there's Experian, there's Trans Union, and there's Equifax, and and you can choose either one. Kevin McCormally: Well, how do you decide which one is the best? Janet Bodnar: None of them is the best. They all do the same thing, they might have little bells and whistles that are different, but then the neat thing about this, is that you can ask for one at a time and you can spread your request out throughout the year, so that you can get a new credit report every four months or so, and you can kind of keep track of your credit history throughout the year. Kevin McCormally: Okay, Janet, I have got my report, what am I supposed to look for? What are the red flags? Janet Bodnar: Mistakes, that's what's you're looking for. Anything as simple as your name is misspelled, or they have you confused with your father, or your address is wrong, do they have a credit account for you that you never opened. Those could be fairly minor things, but the most major things would be, if there are lot of things that are opened that you did not open a lot of credit accounts, which clearly indicates that someone has stolen your identity. That's the kind of serious thing that you're looking for. Kevin McCormally: Okay. So I find a mistake. Is it easy to fix, hard to fix, what do I do? Janet Bodnar: You can get in touch with the credit bureau right online to have your mistake fixed, or you can call them on the phone if you'd rather talk to a real person, and make sure it gets done. You may have to stay on their case to make sure it gets done, but you do have a right under the law to have the mistake corrected. Kevin McCormally: Final question, what about a credit score, is that the same as a credit report different, what does it mean? Janet Bodnar: Well, the credit scores Kevin, it's a number that kind of embodies all of this information that is in these, our credit reports, and that's the score that lenders use to decide, are they going to give you a loan, and what kind of interest rate are you going to get. Now when you go to this free credit report site, you won't be able to get your credit score for free, but if you pay an extra fee, it's usually between $5 and $7. You can get a copy of your credit score as well. Kevin McCormally: Does Kiplinger's think it's worth it to get that score? Janet Bodnar: Think it is worth. It is probably the least expensive way you can get it, you can find out what the score is, and you can find out some tips on how to improve it if that's necessary. Kevin McCormally: Great Janet, thank you very much.