Checking your credit for free

Finance experts will tell you that it's important to keep a close eye on your credit record, for a number of reasons. First of all, a good credit history is the key that opens many doors for you. Not only does it mean you'll have a better chance of buying a house and getting a good rate on a loan, it also has other implications.

Your credit history determines whether you're eligible for a credit card, what your interest rate will be, and whether you qualify for any special promotions. Some employers will do a credit check before hiring you, so that's another place a good credit record comes in handy.

Insurance companies check your credit and factor that in when determining your rates. Better credit means better insurance rates. It's also important to keep an eye on your credit record to make sure no one has stolen your identity and that no credit card company has made a mistake in reporting your activity to the credit reporting agencies.

You can keep up with your credit for free! The first and easiest way to do this is through the free annual credit report program required by law. Each of the three credit reporting agencies must give you one copy of your credit report for free each year if you as for it. All you have to do is visit to start the process. I recommend that you space out your requests throughout the year to make the most of these free reports. Get one at the beginning of the year, another one in the beginning of summer, and the last one in fall. The next year, start the process over again.

There are other ways to get access to your credit information too. If you are denied credit by any credit card company or bank, you have a right to get a copy of your credit report for free. This is required by law, and you should take advantage of it. You will get a notice from the company you applied for credit with, and they will tell you which credit reporting agency they used. Follow the instructions to get your report from that agency at no charge.

There are other services out there to help you check and monitor your credit that say they're "free." Read carefully and follow all instructions so you don't end up paying for something you didn't want. The credit reporting agencies are trying to make money by selling you credit scores and monitoring services that aren't often all that they're cracked up to be.

This week I took advantage of a "free" offer to see my credit score and some other information in my credit file. I did it because I was curious about my score, and the free annual credit report required by law doesn't include the credit score. I signed up for a service that let me see the score and then immediately called to cancel it. I was within my one week "free trial" period, so I will not be charged anything for the service. But many consumers forget to call and cancel or they call too late. That's what the companies are counting on to get your money. The services they're selling usually aren't worth the money, so sign up with caution.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.
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