Has the increased availability of free credit reports improved consumer money management?

The increased availability of free credit reports only improves consumer money management if consumers request and read the reports, and act proactively on them. By going to www.AnnualCreditReport.com, individuals get three free credit reports each year, one from each agency -- Experian, Equifax and TransUnion -- but lenders often look at FICO or Vantage scores.

Free credit scores are available from many sources, including several credit cards (e.g., Capital One) or banks (e.g., Wells Fargo). If you are applying soon for a mortgage, get reports from all agencies at once to make certain there are no errors; otherwise, it’s recommended to spread the reports throughout the year, getting one from a different agency every four months. Consumers also are entitled to receive a free credit report upon being turned down for credit. For credit files that may have been compromised, the company or entity (e.g., a university) may provide free credit monitoring for a period of time.

How important is it to check your credit report more than once per year?

For credit reports containing no errors, it may be sufficient to check the credit report only once a year, but it certainly is helpful to check more frequently for many reasons:

There may be errors and inaccuracies in your report, and you need to correct them;
You wish to be certain that your information is not being used for identity theft or being sold on the “dark web;”
If you are applying for a mortgage or a loan for an automobile or large-ticket item, you wish to be certain that everything on your credit report is accurate, and you want to have the time to correct any errors or to improve your score before the lenders will be checking your report.

Why do you think some consumers are hesitant to check their credit report for free online?

Some consumers are hesitant to check their credit report online because they are uncomfortable entering personal data, such as Social Security numbers, on the internet. The recent Equifax security breach makes consumers wary of any credit reporting website. Others are simply uncomfortable using the internet in general. Some people do not need to check their scores online, because some banks and credit card companies include credit scores in their statements.

How much is a free credit report worth (i.e., what kind of a value does it represent)?

A free credit report provides peace of mind if it is clean and factual. It is even more valuable if it contains errors that you can correct before you are turned down for credit or need to pay a needlessly high interest rate on your loans or credit cards.

What kinds of mistakes might consumers make if they take action based on a credit report that is a week or month old?

Acting on a report that is old may be acting on a report that has incorrect information. Your credit card may have been used fraudulently; someone may have stolen your identity. There may be an error that you need to correct.

Many non-profit organizations recommend that consumers only use the government-sponsored site AnnualCreditReport.com to check their credit report; are they doing a disservice to constituents, considering that you can only check each report once per year through Annual Credit Report?

Do not pay for credit monitoring services that you do not need. Go to www.AnnualCreditReport.com for three free credit reports each year, one from each agency -- Experian, Equifax and TransUnion. These reports do not provide a credit score, but information on what is in your credit report. If you are planning to apply for a mortgage or other large loan, you may wish to pay for additional information, if the information you learn can reduce the interest rate on your loan. A lower interest rate can help you save thousands of dollars over the life of your mortgage.

In most mortgage loan application reviews, lenders pull FICO scores from Experian, TransUnion and Equifax. Even minor discrepancies in your credit reports can impact your scores negatively -- and potentially, the mortgage loan interest rate you might qualify for. That's why it is important to access and review your reports and FICO Scores from all three credit bureaus.