An individual’s annual credit report gives a financial overview of all the transactions that have taken place over the past year. It basically reflects the fiscal health of an individual. Examining the annual credit report is often the first step in solving existing financial problems or preventing them in the first place.
According to the Fair and Accurate Credit Transactions Act, US citizens are entitled to a copy of the credit report every year. To receive a credit report, they can log on to the annual credit report website. This website has been developed through the cooperation of 3 US Credit Bureaus: Experian, TransUnion, and Equifax.
The credit report that is prepared may differ between the different agencies. TransUnion and Equifax may prepare reports on customers’ court accounts and late payments. On the other hand, the report produced by Experian may be completely different.
An annual credit report may be necessary in the following situations:
When applying for a mortgage. The annual credit report is mandatory at the time of applying for a mortgage or a re-mortgage. Creditors come to know the credit worthiness of people seeking mortgage loans by the information reflected in their annual credit reports.
When shopping for insurance. With most types of insurance, such as automobile or home, credit worthiness is also judged from the annual credit report.
In cases of suspected identity theft. If, for example, an unauthorized person used your social security number to acquire fraudulent loans, this would also show up on the annual credit report.
Not only is preparation of the annual credit report important, but credit maintenance should also be done at periodic intervals. Certain debts might be paid but not necessarily reflected in the credit report. In this case, the credit worthiness of the person may be hampered unnecessarily. Sometimes it is up to the individual credit holder to update his or her annual credit report from time to time.