First Person: The Value of a Free Credit Report

One of the most important things for young adults to do is build a good credit rating. Even if you are still in college, or have recently graduated and are looking for employment, or have just started your first career, you should keep a close eye on your credit report. This is true whether you have a lot of income or just a little. The following steps will help you increase your credit score and save yourself some trouble in the long run.

Request Your Credit Report

First, you need to request a copy of your credit report. Federal law dictates that each citizen in the United States is entitled to a free copy of their credit file from each of the three major credit reporting agencies: TransUnion, Equifax and Experian. You can order your free credit report at AnnualCreditReport.com - this is the only federal government-endorsed website that you can obtain your credit file from. It is recommended that each consumer request one credit report every four months, and rotate through each of the agencies, so you can keep a regular eye on the information in your file. I personally request TransUnion in January, Equifax in May, and Experian in September. This way, I never have to pay for a copy of my credit report, and nothing can really sneak up on me between reports.

Verify Your Information

Closely check every entry on your credit report. Make sure each account belongs to you, and that the balance that is reported is correct. If any accounts show as late, verify that this information is correct. If you find any errors in your credit report, immediately follow the instructions on your credit report and dispute these errors to get them cleared up. This will raise your credit score once these issues are cleared up.

Live Within Your Means

For young adults, especially those just starting out, it can be tempting to use your credit to buy things you want. Remember that it's never wise to finance fun. Draw up a budget and stick to it. Pay cash for necessities, and save up for the things that you want. Pay all of your debts on time, and don't let any accounts become late or go into default.

Keeping a close eye on your credit report is the key to staying in good financial health. And, as always, if you have questions about this or any other financial topic, seek the services of a licensed, responsible financial advisor or other professional.

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