If you're looking for scintillating reading material, your credit reports are not it. Yet these often-ignored documents are, increasingly, a must-read.
A quick review: Credit reports are a summation of your credit history and behaviors, as collected by the three major credit bureaus, Equifax, Experian and TransUnion. Lenders, insurers and prospective employers, among other parties, can take a look, making the information therein make-or-break for things, such as what interest you're offered on a credit card and whether you pass a prehire background check. Reports are also the basis for your credit score, that three-digit number in the 300-850 range (the higher the better) that lenders use as a measure of your creditworthiness to approve loans and set interest rates.
"Periodically checking the contents of your credit report is good financial hygiene," said Kareem Rogers, senior vice president of global consumer and business services for Equifax. "We think it's important for consumers to know where they stand as it relates to their credit history."
It's not just knowing where you stand, but also making sure what's in the report is an accurate representation. A 2013 Federal Trade Commission study found that 20 percent of consumers identified errors on their reports that might affect their score, and 5 percent had an error significant enough that it could result in their paying higher loan rates.
Many of those are simple incidents of misreported information, said John Ulzheimer, president of consumer education for CreditSesame.com. "There's very likely a plausible, reasonable and logical explanation," he said.