One of the most important things you can do to maintain a good credit rating is to check your credit report for errors and inconsistencies.  More often than we’d like to imagine, vendors make mistakes in what they report to the credit bureaus.  These errors can be something as simple as stating that a payment was late when it wasn’t or assigning a bad account to your name.  And, of course, there’s always the threat of identity theft, leaving you with potentially dozens of “unsatisfactory” entries on your credit report – and a plunging credit score.

But how can you keep track of your credit when getting a report from one of the three major credit agencies can cost anywhere from $14.95 to $49.95?  That’s where recent laws requiring that every agency provide at least one free yearly credit report can come in handy.

Why Should I Be Concerned About My Free Yearly Credit Report?

Your credit report, and specifically the credit score generated from the report, determines whether and on what terms you will be offered credit.  Everyone from mortgage lenders to car dealerships to department stores review your credit report to determine whether they will agree to extend you a line of credit.  They also use these numbers to determine important factors such as interest rates, fees and credit limits.  If your credit report is not great, you’ll be paying a great deal more for the privilege of using credit than you might like.

What Are the Potential Problems with my Free Yearly Credit Report?

As noted above, there are at least two problems that can occur in credit reports:

• First, there are simple administrative errors, such as a vendor reporting a payment late that really wasn’t, or the accidental assigning of certain bad accounts to your name.  If you have a common name, you should definitely double-check on at least a yearly basis to make sure that other accounts aren’t “lurking” on your report – and dragging down your score.
• Second, of course, is identify theft.  Every year millions of Americans find that someone is using their name, address and social security number to open credit accounts.  If you start receiving mail from companies you’ve never heard of about accounts you’ve never opened, you may be a victim of this crime.

How Can I Get a Free Yearly Credit Report?

First of all, be aware that recently passed laws require each of the three credit monitoring and reporting bureaus to give you one copy of your credit report absolutely free once per year.  If you find problems or inconsistencies on the report, you are entitled to additional free copies of the report until it is corrected.

Unfortunately, some of the advertising surrounding the concept of a “free yearly credit report” has been a little misleading.  For example, at the domain name www.freecreditreport.com, Experian is offering what it calls a “free credit report.”  However, this report is free only if you agree to sign up for a trial membership in Experian’s reporting service – a membership that will cost you $15 per month after the trial ends.  That doesn’t sound very free, does it?

The truly free yearly credit report can be found at www.annualcreditreport.com.  This is the system required by federal law that allows you to check your report for free once-per-year.  Utilizing your social security number the system offers you access to the records maintained by the three agencies.

In short, be sure to take full advantage of the free yearly credit report.  A thorough review and fixing of any problems may be what saves you from paying hundreds of dollars in extra fees and interest on your lines of credit.