Getting Organized: Monitoring Your Credit Report
This is the second post in an ongoing series about about how I organize my finances with lots of accounts; read the first one about bill pay and filing for 181 accounts.
A reader left the following comment in the credit card debate:
I don’t have enough time in the morning to check 89 credit card accounts! I don’t even want to think of what it’s like to check your annual credit report.
The great news is that I don’t spend a lot of time reviewing my credit report. I have actually come up with a fairly simple process. Here’s how it works:
Accessing Our Credit Reports
- Once per year I order our credit reports for free (not to be confused with other websites offering “free” copies).
- I have used credit monitoring in the past when I wanted to apply for a bunch of cards and track the impact on our credit scores.
- Anytime a company orders my credit I ask for a copy and the scores. Sometimes it works; sometimes it doesn’t.
- If I receive an adverse action letter for any reason, I also request a copy of my report.
Reviewing Our Credit Reports
Once I receive our report I quickly verify the following:
- No public records (bankruptcy filings, court judgments and tax liens).
- No delinquent or derogatory accounts.
- No accounts assigned to collections.
- No late payments or past due accounts.
- All names and addresses are reasonable.
If I see any of these, it would be a big red flag (since we don’t have any) and I would work on disputing the item immediately.
Later, when I have a little more time, I will check the following:
- Count the number of open accounts.
- Look for any new accounts by date since my last opened card.
- Review total balances to match credit card arbitrage.
- Check total credit limits.
Handling Errors
If there are any errors I determine how substantial a negative impact would be. I don’t fix all the errors. For example I will dispute a late fee, I would probably skip a credit limit that is off by $200. My experiences with the dispute process are positive so far.
Interesting Findings
I have 2 Transunion credit reports. I requested that they be merged, but since it fell low on my impact list, I haven’t worried too much about it.
Lots of accounts doesn’t equal lots of extra work when it comes to reviewing your credit report. The most important items are the same as any other person with 5 accounts….. I just have 17 pages.
Helpful Resources
- Federal Trade Commission: Consumer Protection Facts for Consumers
- Transunion: Credit Basics and “How to Read Your Credit Report” at the same site.
- Hot Free Money Deals: Barclaycard $440+ | $3,000+ in Bonuses
You make a good point about the free credit report. There are a lot of companies out there trying to lure consumers in with their “free 30-day trial” tactics. For most people that review their statements regularly, the once year free report is sufficient. Having so many credit cards (I admire the discipline you must have), what have you found to be the biggest credit score drivers?
@ Dan:
After monitoring our scores daily for quite some time, I found the biggest drivers for us were: Low utilization percentages and minimal inquiries. This is in addition to not having any of the negatives (late payments, collections, etc.)
I have found that the number of accounts does not hinder us at all; in fact our scores are quite high.
Thanks for the link! I totally agree that you need to stay on top of your credit report. There are too many bad people stealing identities out there to risk not taking a look at it. And since you can get a free report, there’s really no excuse for letting it slide.
did you see that they are changing the formula for figuring credit scores in 2008?
Excuse my ignorance but, what do you mean you have two credit reports with Transunion? Isn’t it supposed to go by SS#? Now I wonder if I might be missing some report that I am not aware of?
@ Rocket: Yes, I saw a headline about the score changes but I haven’t read much about it yet (except the part about removing Authorized Users from the scores). I’ll have to look into it.
@ Cristina: You’re right it does go by social security number, but it also uses names and other personal information. Somehow I’m in their database twice with the same SSN. I’m guessing it has to do with using two names (maiden and married names), but I’m not quite sure.
Either way, you aren’t missing something. It’s very rare (and incorrect) to have two reports. Each person should only have one!
Now that I have done this, what should I do about closed account? Does it hurt me to have them? It really scared me when I first looked at my report and saw all of those. Then I realized that 90% of them were closed. Any tips?
@ LC:
There’s nothing you need to do with the closed accounts. They’ll remain on your report for 7 years, then they’ll just fall off. In fact they might be helping your score; I had some really old closed accounts that helped my average age. Once they fell off, I lost a few points!
I think the biggest reason to use credit monitoring all year round is identity theft. If you can catch and freeze your report with the first signs of anyone opening another account, you can save yourself a lot of headache trying to clean up the mess.
Getting one account cleaned off your report is alot easier than 10.
I enjoy credit monitoring for identity theft and I also like to keep track of my FICO score. I heard recently that being a member of LifeLock can potentially cause a person to not be able to obtain their annual credit report because of the fraud alert. Just be careful there otherwise credit monitoring is a great service for identity protection. Keep in mind LifeLock is not credit monitoring.
Anybody use lifelock.. you know when the CEO running around giving away his SSN? Just curious if it works and how well.