Key to Being Financially Fit in 2012: Conducting an Annual Credit Checkup Infographic

Every American Should Check Their Credit Report Annually to Protect the Health of Their Personal Finances

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Jan 10, 2012, 08:30 ET

LOS ANGELES, Jan. 10, 2012 /PRNewswire/ -- At the start of 2012 as millions of Americans resolve to lose weight and improve their finances, it is important to realize that success in both missions ultimately relies on a numbers game. In personal finance, knowing your creditworthiness and striking the right balance between cash in and cash out are the keys to success. Today, CreditDonkey.com released an educational infographic to provide consumers tips and facts for conducting a basic credit self-assessment.

"Knowing your creditworthiness is the first step to improving your personal finances," said Charles Tran, founder of CreditDonkey.com, a credit card comparison and educational website. "Yet, far too many Americans remain in the dark when it comes to knowing their creditworthiness and this can have negative implications on their interest rates, how much they pay for loans, and even their employability."

According to the Consumer Financial Protection Bureau and the Census Bureau, despite about $2 trillion worth of credit card transactions running through the largely digital American banking system, only about 16 million people a year, out of about 183 million credit cardholders in the U.S., take the most basic step to protect themselves from fraud and their financial reputations by requesting a free annual credit report directly from the three nationwide credit reporting agencies.

CreditDonkey.com has compiled facts and tips to help consumers keep better tabs on their credit health:

Free Credit Report: Under the Fair and Accurate Credit Transactions Act (FACT Act), consumers are entitled to a free credit report from each of the three credit reporting agencies - Equifax, Experian, and TransUnion - once every 12 months. The three nationwide credit reporting agencies operate a single website, AnnualCreditReport.com, which is the only authorized online source for free credit reports.
Identity Theft: An important way to protect against identity theft is to check your credit report periodically. You can request a free annual report from all three credit reporting agencies at the same time or stagger them throughout the year.
Mistakes: Credit reports can contain mistakes. While the FTC is currently conducting a study on the accuracy of credit reports, a report by U.S. PIRG found that one out of four credit reports contains a serious error that can adversely impact your credit. Look for evidence of identity theft or activity that is not yours. Lenders do not necessarily report to all three credit reporting agencies, so errors may appear on one report but not on others.
Correct Errors: To correct errors on your credit reports, contact the credit reporting agencies in writing and provide copies of the documents to support your assertion. Credit reporting agencies must investigate claims unless they consider the dispute frivolous.
Negative information on your credit report that is accurate can only be removed with the passage of time. For example, credit delinquencies will stay on your credit report for seven years and bankruptcy information will stay on your credit report for 10 years.
Credit scores represent, in theory, your creditworthiness -- the likelihood that you will pay your debt.
Multiple Scores: Many of the scores calculated for and used by lenders are not available to consumers. Credit scores are likely to vary based on different scoring methods and differences in the data available. Consumers unaware of the variety of scores may purchase a score believing it is their "true" score and when in reality the score that lenders are seeing is quite different.
Think carefully before consolidating high credit card debt through a second mortgage or home equity line of credit because most credit card debt is considered "unsecured debt" while mortgages and home equity loans are "secured debts" that require you to put up your home as collateral. If you cannot make the payments on secured loans, you could lose your home.
Credit Counseling: If you get into credit trouble, consider contacting a reputable credit counseling organization such as one offered by a university, military base, housing authority, or branches of the U.S. Cooperative Extension Service.