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  • Getting Your Free Credit Report

    Posted on August 18th, 2010 William No comments

    To adequately prepare for retirement, it's important to understand the basics of credit. Having good credit makes it easier to borrow money at lower rates; while you generally want to avoid going into debt, sometimes you have no choice. A better credit score can also result in lower premiums on your car insurance, improve your chances of getting a job, and help in other (apparently unrelated) ways.

    There are three major credit bureaus in the United States, each of which assigns you a score based on their own proprietary formula; as a result, your score will differ slightly depending on which bureau you obtain it from. You're entitled to a free credit report from each of them once per year, which will let you check that there is no incorrect information on your account, but this doesn't include the actual score; getting that generally requires paying a small fee. Most Internet services offering you a free credit report are actually scams that will sign you up for an expensive monthly subscription, if you're not careful.

    Your credit score is a number between 300 and 850 that takes into account factors such as how old your credit is, how many different types of credit you have, payment history, how much money you owe compared to your income and credit lines, and how many "hard" inquiries the bureau has received recently. These days, many employers will pull your credit report before hiring you, because they see it as a measure of reliability; if you pay your bills on time, the thinking goes, you're more likely to also be reliable at work. Similarly, car insurance companies believe that people who have better credit will cost them less in claims, on average, than people with worse credit; accordingly, paying your credit card late can adversely affect your insurance premium!

    To get your free credit report, go to annualcreditreport. com; you'll need to provide some basic information and choose whether you want to get your report from Experian, Equifax, or TransUnion. You can get all three at once, or spread out the requests over a year so that you get another report every four months. Note that not every creditor reports to every credit bureau, each one may have slightly different information. Save or print your report so you can refer back to it.

    Warning: People have been known to leave tax and credit information sitting on freely accessible  websites where anyone can get to them; these contain all the information anyone needs to successfully steal your identity! If you must keep personal information online, ensure it's protected with a strong password.

    Once you have your report, check each item to be sure that there is no incorrect negative information; if any exists, you have the right to have it removed.

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