A lot can happen in 365 days.

Usually, around the time of my birthday in March, I like to get my yearly doctor check-ups done. It's just easier for me to remember and also I feel like it makes sense since I’m another year older and another year wiser.

One other thing that I also like to do during this time is to check my credit report…because my birthday also means another year of being a more responsible adult.

If you are not comfortable doing this around your birthday, do this around tax season. It's a great way to put yourself in the mindset of money management. Start associating April as the month where you also take care of yourself and your finances. 

Just as any yearly doctor visit exam, there's going to be some apprehension, but the more you get into the habit of checking your credit report yearly, the better you can feel about your financial progress.

Why Check Your Credit Report

When lenders decide whether to extend you credit or approve a loan, they will review your credit history and your credit score to see if you are worth lending to. You will be worth lending to if you are low risk to them, meaning you have successfully managed credit wisely in the past. For most Americans, their credit history begins at the age of 18, primarily with either a credit card or a student loan. This is important as over time your credit history can take on a life of its own. By proactively keeping an eye on your credit history through frequent reviews of your credit report, you can potentially catch mistakes or fraudulent activity early on.

Each year, the U.S. government allows you to check your credit report for free and this is where I take advantage. Credit reports are offered by the 3 leading credit reporting agencies: TransUnion, EquiFax, and Experian, and it’s important to look at all three to ensure they have the right information.

Every year, I check my credit report...

• To see that they have properly recorded my payment history. I pay my bills on time and want to make sure I get credit for that as those will be counted as positive points in my credit score.

• To see that all of my credit cards are listed properly. If I closed any, I want to make sure they have been recorded properly. (I sometimes open/close credit cards to get bonus miles, but have some other long-standing credit cards with a long history.) I also check to see if any credit cards have been opened without my knowledge.

• To see if any loans I have taken are properly listed with the appropriate amount.

• To see that my names and addresses are correctly listed. Most of the information can get transcribed incorrectly so it’s a good idea to verify that names and addresses are spelled properly. Having a mistake in your name could lead to more damage in the future so it’s good to review your personal information often.

• To see that there are no strange entries life if I have been sued, arrested, or filed for bankruptcy without my knowledge. This can happen for people with common names where Social Security numbers and names are not transcribed properly and entries that shouldn’t be yours appear in your history. This will hurt your credit score and thus your borrowing capabilities and sometimes job prospects.

What’s The Difference Between a Credit Report and a Credit Score

Your credit report and history will be used to determine your credit score or what is also known as your FICO Score. FICO Scores are used in more than 90% of lending decisions. The higher the credit score the better lenders look at you. What this means is that you have lots of negotiating power to get lower interest rates, increases in credit lines, and higher chances of getting approved for loans. This can mean a world of difference. A great credit score can save you thousands of dollars over your lifetime. This is why it’s important to understand what credit is, what goes into your credit history and how to use credit wisely. The three numbers that make up your credit score can dictate the job you get, the car you can afford, and the house you can buy. 

The big thing that isn’t emphasized as much as we would like is that your credit history can impact your future lifestyle. Bad credit history and a low credit score can mean not being able to buy the house of your dreams or needing to have more cash reserves to be able to make large purchases. It can affect the kind of loans your children may have access to for higher education expenses.

How Do I Get My Free Credit Report

As  I mentioned above, the government made it a law that you can pull your credit report for FREE once a year. Head to annualcreditreport.com to do so. Do not pass Go. Do not pay a fee. Head there directly. 

At the site, you will be asked for a few key pieces of personal information, namely your name, address and Social Security number. From there, it will prompt you for a few other identifying pieces of information. Once it confirms who you are, it will prompt you to see if you are ready to see your first credit report. Clicking so will pull up a report from one of the credit reporting agencies and you'll need to do the same for the other two reports. My suggestion is to ALWAYS print your reports out to PDF and save them so that you can review them further. If you see a mistake, contact the reporting agency right away. Because some companies do not report to all credit bureaus, you may notice a mistake in one and not the other so follow through appropriately.

As you review your credit report, you will get ads on the side to view your credit score. Skip those as they will require payment. Instead see if any of your existing credit cards provide your credit score for free. Call them up or check the Offers and Services section. One caveat is that they may only show you a credit score from one of the credit reporting agencies. If you want to see all three (TransUnion, Experian and Equifax), head to myFico.com. You will pay around $20 for each score from each reporting agency. All three should report in the same range unless there is a glaring piece of misinformation in one of them that you should resolve ASAP. 

Don't forget that add a yearly reminder to your calendars to check your credit report. 

Credit Report vs. Your Yearly Doctor’s Visit

Was it strange for me to compare checking your credit report with your yearly doctor’s visit? Yes, but I wanted to highlight that there are going to be some situations that may be uncomfortable that are necessary for us to do. A doctor’s visit may not be something that we look forward to, but it's necessary for our health and well-being.

Personal health and financial health require attention.

We do it and hope that we find nothing and that alone is great peace of mind. So even though checking your credit report or visiting your doctor takes time, may cost a little money, and maybe slightly uncomfortable, the sooner we are able to catch an issue, the sooner we can address areas of concern, the better off we will be. I know many of us think we are invincible, but I'm here to tell you otherwise. By being proactive, we can change the course of our lives today and create a better path for our future selves and our future family. Don't let your family be victims of today's inaction.