Day 5 of the NY Times 7-Day Financial Tuneup is about your credit reports. (Yes, I’ve been taking this at my own pace. Sign up for your own personalized tune-up here.) This one felt a bit basic, so I also recommended a bunch of additional sites that are hopefully also helpful. Let’s start with a summary of what the NYT says:
- Understand what your credit report means. Your credit report includes data on your credit card payment history, mortgages, student debt, new loan applications, and bankruptcies.
- Get a copy of your credit report. AnnualCreditReport.com is the official government-mandated site. You can get one of each of the three major bureaus (Experian, Equifax, and TransUnion) once every 12 months, so one tactic is to stagger them every 4 months.
- Check for errors. You can dispute errors using sample letters from the Consumer Financial Protection Bureau. Instructions are included for disputes with both the credit bureau and the lender.
- Improve your habits, if needed. Credit repair 101… Pay your bills on time. Keep card balances well below your credit limit.
Hold off on opening new accounts for a while.
- Freeze your credit. The NYT says that it is “generally a good idea” to freeze your credit. You will have you unfreeze your credit next time you apply for a credit card, try to rent an apartment, apply for a mortgage or do anything else where a company may need your credit report. You may need to spend $5 to $10 each time as well.
My take on credit freezes. Freezing your credit may be a reasonable step if you rarely do anything that would require a thaw. However, between my wife and I, we probably get 10 credit pulls a year. (Don’t worry, zero credit card debt, zero car loan, zero mortgage debt. Credit score is still good too.) Every time I apply for a new credit card or join a new credit union, I might would have to thaw and then re-freeze the bureau, and that’s if I already know ahead of time which one of the three I need to thaw. That adds up to both a lot of time and money.
I would add a free credit monitoring service instead. A timely example – just yesterday on March 5th I decided to apply for a new credit union membership at Sharonview Federal Credit Union. Some preliminary research indicated that they would probably pull a credit report (probably TransUnion), but I wasn’t sure. After making the application, I was notified right away by multiple free credit monitoring services that it was TransUnion (and only them). I’m writing this post on March 6th. If a credit freeze had blocked their check, I would have to manually ask them to check again, which would have delayed my application on a limited-time offer.
Here’s a screenshot of my free alert from CreditSesame.com:
Here’s a screenshot of my free alert from CreditKarma.com:
I think you’ll agree that the ability to receive a free alert within a day is a lot better than checking in at most once every 4 months. CreditSesame tracks TransUnion, and CreditKarma tracks both TransUnion and Equifax. There are other options and most are advertising-supported, so you’ll see ads for mortgages and credit cards on the site. There may also be some “premium” features they try to upsell you, but I’ve never had to pay a cent.
Financial Tuneup Recap (still in progress)
- Day 1: Optimize Your Thinking
- Day 2: Trim Your Budget
- Day 3: Finding Better Credit Cards
- Day 4: Retirement
- Day 5: Credit Report (this post)
- Day 6: Insurance
- Day 7: Emergency Fund
- Alternate Day 6: Flexible Spending Accounts
- Alternate Day 7: Student Loans
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