Why you should check your credit report and credit score

With the new year finally upon us, it’s time to get started on all those resolutions.

And if you’ve resolved to become more financially secure, it’s time to get your credit report.

Your credit report is far more than a piece of paper, financial experts say.

Not only is it used by lenders and creditors, it’s also looked at by landlords, insurance agents — even potential employers — as a sign of your personal worth and responsibility.

“Your credit report and how you handle your financial obligations provide an important glimpse into your character,” said Greg McBride, a senior financial analyst at Bankrate.com.

But what do you do when your credit report isn’t you?

Depending who you ask, 25 percent to 70 percent of credit reports contain errors ranging from minor misspellings to serious mistakes like having someone else’s accounts on your report.

Oftentimes, consumers don’t find out about these errors until they apply for a loan or a credit card.

“Too often consumers think, ‘I don’t have a problem on my credit report, I pay my bills on time,’ ” said consumer advocate Denise Richardson.

“It could happen to anyone because of someone else’s mistake.”

Richardson knows firsthand how debilitating credit report errors can be — and how difficult they are to clean up.

She said she has spent the better part of the last 15 years trying to remove damaging errors placed in her report by creditors.

She said she didn’t find out about them until she applied for loans and was rejected.

If you know what’s in your credit report, you can fight it,” said Richardson, a Florida resident and author of “Give Me Back My Credit!”

Under the Fair and Accurate Credit Transactions Act, people are entitled once a year to a free copy of their credit report from each of the three major reporting agencies, TransUnion, Equifax and Experian.

It’s more [important] than your grades in college, your grades in high school.

It’s really your report card for life,” said Joy Franklin.

She’s executive vice president and chief operating officer of the American Credit Alliance, a nonprofit credit counseling agency in Morrisville.

Franklin said anyone planning a big purchase like a house or a car should pay the extra money to get their credit score, which isn’t included in the free report.

A credit score — often called FICO after its developer, the Fair Isaac Corp. — determines your creditworthiness.

If the score is high, you have extra bargaining power with a lender, she said.

Common mistakes that damage credit are applying too often for credit and carrying credit card balances that are more than 50 percent of your credit line, Franklin said.

Having too many credit inquiries on your report will also lower your credit score.

And having too much debt makes you a liability, Franklin said.

Be upfront with lenders about past credit problems, she said.

“Don’t let the lender be surprised,” Franklin said.

If you find an error on your credit report, write to the credit agency where the mistake appears.

Keep track of when you notified the agency, and send correspondence by certified mail.

“The dispute process is for removing inaccurate or incorrect information, not information you don’t like, if it happens to be true,” he said.

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