hen you go to a banker or finance company to ask for credit, do you think they will give it to you without knowing whether you will be capable of paying them back?  Of course not, they will rely on your credit report to give them all the facts they need and want about you before considering giving you a loan.

From your credit report they will receive information on the balances of any loans or credit card accounts you may have, what monthly debts you owe, credit you have available and how you pay your bills.  Your credit report also includes information about late payments, bankruptcy and any action that has been taken against you because of unpaid bills.

Why Should You Get a Copy of Your Credit Report?

Reviewing your credit report at least once a year is highly recommended, but it is also important to review it more often if you are planning to apply for any type of loan.  This allows you to make sure there is no incorrect, outdated or omitted information on your report that needs to be cleared up immediately.

Another reason for checking your credit report information regularly is to help guard against identity theft.  This is a scam where people steal your social security number or credit card number to buy services in your name.  If you suspect identity theft when reviewing your credit report, you will need to place a fraud alert on the report, file a complaint with the FTC, close all accounts that have been put in jeopardy and file a police report.

Maybe you've had a bankruptcy that is more than ten years old or other debt more than seven years old.  By reviewing your credit report, you can see if these items are still showing up or have been taken off.

Where to Get a Free Credit Report

As a consumer, every 12 months you are guaranteed access by the Fair Credit Reporting Act to a free credit report from Experian, Equifax and TransUnion.  These are the three major credit reporting agencies.  There are many web sites that claim to offer free credit reports, but the only authorized site that can fill the free annual credit report orders for consumers is AnnualCreditReport.com.

One free credit report per year from each credit reporting agency can be requested online, by phone or by mail.  Online requests are viewable immediately upon authentication of identity.  Free credit report requests by mail or phone are processed within 15 days.

To receive your free report, you will be asked your name, address, social security number and date of birth.  For security reasons, the companies may ask for additional information.

What You May Need to Know about Your Credit Score

Your credit score, which is based on your financial activity, is a major factor in determining whether you can get a car loan, house mortgage or credit card.  Lenders review these scores, which are provided to them by Equifax, Experian and TransUnion to determine the risk of a borrower.

With FICO scores ranging from 300 to 850, someone with a score of 720 or higher is almost guaranteed the lowest possible interest rate.  A score of 680 or better is a good score, and if other financial factors are in your favor, this score can also bring the best possible rates.

Find out what range your score is in by purchasing your credit score online for a small fee from the three major credit reporting agencies.  The score is not included with your free credit reports; however, you will be offered the option to purchase it while getting a free report.

As a consumer, it will definitely pay off to examine your scores and credit report, especially before shopping for a loan!