According to a 2013 Federal Trade Commission study, one in five consumers had an error on at least one of their three major credit reports. And five percent had errors that could cause them to pay more on loans and insurance products.
The first step to fixing errors in your credit report is to know whether they exist, which requires credit monitoring on the part of the consumer. Fortunately, federal law requires each of the main credit bureaus to allow consumers to access their credit files for free once a year.
There really isn't a downside to checking your credit as much as possible, and it can help you identify incorrect or unauthorized activity.
"If you're at the dealership figuring out what kind of rate you can get on a car loan, that's going to generate a hard inquiry on your credit report, but simply monitoring your credit only generates a soft inquiry, which doesn't affect credit scores," says Gerri Detweiler, Director of Consumer Education at Credit.com.
Consumers also may want to monitor their credit to track their progress in improving their credit score. The key for consumers working on improving their credit to remember is to be consistent with good financial habits, and not to obsess over a number.
"Don't get hung up on your number, and don't worry if you see a number that's different across reports. Credit scores are in constant fluctuation," says Detweiler. "The main thing to focus on is where your credit history could use improvement, and where you're doing alright."
Here are 5 places where you can check your credit.
The "Big Three" Credit Bureaus
Every year, consumers are entitled to one free credit report from each of the three main credit-reporting companies-Equifax, Experian, and TransUnion. To get a copy, go to AnnualCreditReport.com, the official site authorized by law to provide consumers their free annual credit reports.
According to the Consumer Financial Protection Bureau, consumers may choose either to request all three free annual reports at once or to stagger their requests in order to receive one report every four months. While both options amount to three reports per year, the latter strategy allows consumers to monitor their credit files more frequently throughout the year.
OneMain Financial customers can check their VantageScore, one of the major credit scores in the U.S., every month behind the security of a firewall.Click the following link to check your VantageScore.
Consumers can get both credit reports and credit scores for free (with no strings attached) at any time at CreditKarma.com.
"From the beginning we believed in offering consumers better insights into their credit for free,"" Bethy Hardeman, consumer advocate for CreditKarma, told Bankrate.
The content of the reports comes from TransUnion credit files, and CreditKarma offers both the TransUnion Credit Score and the VantageScore.
Whichever provider you use for accessing your credit report or credit score, one of your primary focuses should be monitoring for errors or suspicious activity.
"Huge fluctuations within a short period of time are a red flag–that could indicate a mistake, problem or even identity theft," says Detweiler.
Interview with Gerri Detweiler of Credit.com
Interview with Scott Lascelles of Springleaf Financial