Thinking about buying a house, car, or other big ticket item, and know you’ll be using credit? Before making a big purchase, your first step should be to take a look at all of your finances. Check out these five steps to prepare your finances that won’t cost you a penny.
1. Take advantage of your free annual credit reports.
You can visit AnnualCreditReport.com to get a copy of your credit reports for free. The three nationwide credit reporting companies – Experian, TransUnion, and Equifax — each have to provide your free credit reports every 12 months – but only if you request them. You can check the three reports periodically throughout the year or all at once. If you decide to request one report every four months, you can monitor your credit reports more frequently throughout the year.
2. Review your credit reports for inaccurate information.
Take a close look at your credit reports to make sure all the information on your report is correct. According to an FTC study , one in five people have errors on their credit report. Not sure what to look for? Here’s a list of common credit report errors to help you through the process.
3. Dispute credit report errors with the credit reporting company that sent you the report.
Incorrect information on your credit report may hurt your ability to get new lines of credit or may make the terms of credit more expensive. You can dispute inaccurate information with the credit reporting company. You can use these instructions and template letter as a guide.
4. Dispute credit report errors to the company that provided the information.
The company that provided or “furnished” the information to the credit reporting company is known as the “furnisher.” Furnishers could be your bank, your landlord, or your credit card company. You can dispute inaccurate information directly with the furnisher. Use this template to send a letter to the company that provided the information you’re disputing.
5. Make a plan.
Even if you don’t have errors on your credit report, reviewing your report can help you make a plan for how to improve your credit. For more help putting your plan together, download this guide to Rebuilding Your Credit .