First, by law, you are entitled to one free credit report each year from each bureau. The three big credit-reporting bureaus you should be getting your information from are Equifax, Experian, and TransUnion. "What we suggest is getting one every four months," Perry says. "Space it out." She explains you can get one report from one bureau, and then four months later get another report from another bureau, and so forth. This way you are monitoring your credit reports throughout the year. And this doesn't go by the calendar year, you can start the process right now.
When you go to get your free credit report, skip any of the extra services that are being offered. These companies want to sell you services like monitoring your credit report all year long. But if you space out your credit reports during the year, you are actually doing this yourself. The sites might also offer to monitor your monthly bills. "You can monitor your monthly bills," explains Perry. "When you get your bank statement, when you get your credit card report every month, you look at that and make sure there (is) no fraudulent activity, there's nothing funny, you haven't been charged anything. You can do all that yourself. You don't have to pay."
You should also know that even though you can get your credit report for free, you do have to pay a fee to see your credit score. A credit report is just a history of how reliable you are at paying your bills. However, a credit score gives you a number between 300 and 850 which banks use to help make lending decisions. A high score means you could get better interest rates or even higher credit limits. Perry suggests you get your credit score from www.myfico.com, where you pay a fee of $19.95 to get an estimate of where you stand.
And if your score is lower than you had hoped, there are ways you can improve it. The first thing you want to do is pay any outstanding bills you may have as soon as you can, and then keep paying your bills on time. "That's what potential lenders want to see," says Perry."They want to see somebody who's reliable, and pays their bills." Another thing you can do to improve your credit score is to not max out on your credit. It's not a good idea to open a new store credit card where ever you go.
For more information on what you should know about credit reports and other consumer advice, visit www.shopsmartmag.org.