Without a doubt, one of the best things you can do to stay on top of your financial situation is to check the accuracy your credit report.  In fact, it’s so important that the U.S. Government recently passed legislation to allow every citizen access once per year to a totally free credit report.

Why is my credit report important?

Many different entities  will use the information in your credit report to determine whether you are a good risk.  These might include:

• Banks
• Merchants (such as department stores)
• Car dealerships
• Landlords
• Potential employers

Imagine losing out on a great car, apartment or even job all because your credit report contained inaccurate information.

Who Manages My Totally Free Credit Report?

Vendors forward information about how you manage your bills, including notes on late payments, credit limits available and the like, to one of three different credit agencies.  These are:

• Experian
• Equifax
• TransUnion

These agencies take this information as well as information they share with each other to create a report that provides extensive details on your use of credit, from what your historic balances are to whether you’ve ever made any late payments.

How can I get a totally free credit report?

The good news is that a federal law requires each agency to provide consumers with one totally free credit report every year.  The bad news is that the free credit report is hard to find.  In fact, if you search on the term “totally free credit report”, a number of not-so-free options will pop-up.  To avoid any surprise fees, you’ll want to turn to www.annualcreditreport.com, the site that was required to be established under the recently passed legislaiton.

How does the annual credit report site work?

Once you’ve landed on the right page for your totally free credit report, you’ll be asked to provide important information, such as your social security number and date-of-birth.  This information will be used to match you with the proper report.  Then you will be taken to a page where you can download reports from the three agencies.  Review these reports carefully for any inaccuracies – even something as simple as a name misspelling or inaccurate old address can lead to BIG problems in the future.

Will my credit score be negatively impacted if I access my totally free credit report?

Some people have heard that just checking your credit report can negatively impact your credit rating.  Actually, this isn’t strictly true.  If you have too many requests from vendors, such as banks or merchants, your score may be affected simply because potential lenders might be concerned that you are considering taking on a great deal of debt.  However, the occasional personal review of your report on your own won’t make any difference in terms of your credit score, but could make all the difference on catching a problem early.

In short, utilizing the tools noted above to download and review your totally free credit report isn’t just a good deal.  It’s an essential component of financial success.  Mark your calendar for a yearly review – and then do it!