Smart About Money: Credit Reports

A question about credit reports that I have never seen addressed before came up the other day.

“I always hear we should check our credit reports annually,” a bank customer said. “So I do. But I don’t even know what I’m looking for, or if it’s really important to check them at all. Am I wasting my time or is it worth it? What do you think?”

People are always advised to keep an eye on their credit reports. It’s one of the most common pieces of financial advice out there. And consumer protection folks had to fight for consumers’ rights to get a copy of their credit reports once a year at no charge. (Before that, the three credit reporting agencies — Equifax, Experian and Transunion — had been charging people to see their own credit reports. Another example of things changing for the better!)

So is checking your credit reports annually worth the time it takes to do it? I would say yes, and here’s why.

First, if you’re planning to be applying for any type of credit, it’s critical that you know where you stand. Second, knowing what’s in your credit reports, good or bad, gives you peace of mind.

The credit reports have been redesigned in the past few years. They’re very easy to read and understand now. If your credit is good, you’ll see all your payments up-to-date for all the credit accounts you have outstanding. Knowing you have great credit gives you negotiating clout when you’re applying for a loan. You should expect to be offered the best/lowest rates available.

If there have been some “potholes” along the way — late payments, missed payments, charge-offs — you’ll be able to see that too. And you’ll know what a potential lender is seeing.

Maybe there are some dings on your credit reports and you’re not sure how bad they are. That happens all the time. Make an appointment to sit with a lender and ask before you apply for a loan. They may be able to set your mind at ease. If there’s work you need to do before you’re likely to be able to be approved for a loan, they can tell you that too.

You also want to be checking for any evidence of fraudulent use of your name and/or Social Security number on your credit reports. An account you don’t recognize is a major red flag. The credit reporting agencies make it very easy to report security concerns.

And if there’s any outdated or flat-out wrong information on your credit reports, regular annual reviewing gives you a chance to take care of disputed items before they have a negative impact at the worst possible moment.

Be careful you’re on the right site when you’re checking your credit reports. There are many imposter/look-alike sites out there, which is why the Federal Trade Commission makes a point of warning people about them. The one you want is annualcreditreport.com and you are entitled to one free credit report from each of the three credit reporting bureaus each year.

Before you buy any pricey extra service packages (annual credit monitoring plans or identity theft protection, to name just two), consult with your banker or other financial advisor to see if it would be worth it for you. There can be a lot of upsell pressure for something you may not want or need. Remember: You will not need to give any credit card information to get your annual free credit reports.

One last thing: No matter what your credit reports might say, you are always more than a number. Good lenders know that. If there have been situations that have caused there to be issues on your credit reports, that is definitely something to talk to your lender about. You might be very pleasantly surprised.

Nick Maffeo is the president and CEO of Canton Co-operative Bank in Canton. Have a question? Email to submissions@thecantoncitizen.com.

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