It is critical that you know what is in your credit report if you will be applying for a car loan or a home mortgage anytime soon.  The first thing your potential lenders will do after you apply for a loan is to check your credit report to see if you are “credit-worthy.”  And as we’ve said before, the better your credit history, the lower the interest rate you will be offered. 

I’d like to now show you, three easy ways you can get a free copy of your credit report.

Before we start off the block it is important to know that you actually have THREE credit reports, each published by one of the three major credit reporting bureaus, TransUnion, Equifax, and Experian.  Your past and current lenders provide information about your credit history to each of these three bureaus. 

The bureaus package this information into your credit report, and generate a resulting credit score.  The good news is that, by law, you are entitled to a free copy of each of your credit reports each year. 

Listed here are three ways you can get your copy:

#1:  Online. 
The three credit reporting bureaus jointly sponsor a website specifically for the purpose of providing copies of your credit report.  Well, actually the real purpose is to sell you additional services.  More about that in a minute.  Go to AnnualCreditReport.com, and click on the Request Report button.  You’ll have to provide a little personal information, but you’ll be rewarded with a copy of your credit report instantly. 

A note of caution: 
There are a lot of scam websites with similar names that will try to sell you a copy of your report.  AnnualCreditReport.com is the only “official site” sponsored by the credit bureaus.  Yes, they will try to sell you credit monitoring services, your credit score, and a variety of other “services,” but you don’t have to buy them in order to get a free copy of your report.

#2:  By phone. 
You can also call the credit reporting bureaus to request a copy of your report.  The number is 877-322-8228.  They will take you through a verification process over the phone. They might tell you that they’ll “mail the report within 15 days” but don’t expect to see your report any time soon. I suggest you allow 2-3 weeks for delivery.

#3:  By mail. 
The third way to request a copy of your credit report is by mailing a form to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.  They ask that you use a specific form available on their website (AnnualCreditReport.com), and once they get your form it will take a month or so before you get your report.  Since you have to go to the website to get the form, you might as well request the reports online – it is certainly a lot faster.

Since you can get ONE free copy each year from each of the THREE credit bureaus, if you space out your requests (one request every four months), you can monitor your credit reports over the period of a year, all for free.

What about fixing your credit?

Let’s be honest.  Some credit problems are complex, and require sophisticated solutions that may take months or years to have an impact.  But, if you have just a few blemishes on your credit report that have lowered your credit rating, then there are some immediate actions you can take. 

Action Plan #1:  Start paying off your debt. 
Set aside some money every month to pay off more of the balance you’re currently carrying on your credit cards.  Even if it means not taking a vacation or eating meals at a restaurant less often, the more extra cash you can apply toward your debt right now the better.  But, don’t pay off your cards each month-it’s actually better to leave a little balance so the lenders know you can handle credit.

Action Plan #2:  Get copies of your credit reports. 
As outlined above, all three of the major credit bureaus must, by law, provide you with a free copy of your credit report each year.  This is your chance to look for inaccurate or outdated information and get it removed.  Any new lender (and some insurance companies and even potential employers) will order a copy of your credit report before doing business with you, so you want your report to be as glowing as possible.

Action Plan #3:  Pay your bills on time. 
After you’ve gone to all the trouble of cleaning up your past credit hassles, it just doesn’t make sense to go creating new ones!  It’s more important than ever that you pay your bills on time – this is the best form of debt settlement.  Just one “late-pay” reported to the credit bureaus will undo all the good work you’ve done, and your credit score will suffer as a result.

Action Plan #4:  Increase your line of credit. 
If you add together all the credit limits offered by your lenders, you’ll have your line of credit.  There are a couple easy ways to raise your credit limit.  You can call some of the credit card companies with whom you’ve had an excellent payment history and ask them to raise your credit limit!  You’d be surprised how often that works. 

You can also secure one or two new sources of credit but you don’t want to litter your credit report with too many new credit cards.  Lenders can become suspicious and you may be tempted to go on a spending spree!!

Action Plan #5:  Cash is still KING. Pay with cash. 
Once you’ve gotten your finances under control you can keep them that way by paying with cash because it ensures that you’re not spending money you don’t really have.  Living on a “cash and carry” basis might well mean a better standard of living down the road and amazingly this will “lower your bills” and be a great “debt relief”.
 
I can hear you thinking… “Oh my Lord where will all this cash be coming from?”  Like I indicated above, it may be painful in the short term to forgo your vacation or that new HDTV, but in the long term it’s the really big purchases, like a home or car, that will benefit from your better credit rating.

If you’re considering getting a new mortgage or car loan anytime during the next year, now is the time to start fixing your credit.  Every bit of negative information you can get erased from your credit report will help raise your credit score and lower the interest rates you’ll be paying. 

So Get busy my friend it’s going to worth every bit of effort you spend!