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Why waiting until you need a loan to check your credit is a huge mistake

Many consumers ignore their credit reports. (AP Photo/Mark Lennihan, File)
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It’s standard personal finance advice that people should check their credit reports to know what loans and debts are recorded under their name — and to make sure there aren’t any errors.

Yet many people don’t actually do it.

Thirty-five percent of consumers have never checked their credit reports, according to a survey released Monday by Another 23 percent of people said they check their credit reports about once a year, and 14 percent said they go more than a year without looking at their reports.

Younger and older consumers were more likely to turn a blind eye to the files: 41 percent of consumers ages 18 to 29 had never seen their credit reports. Neither had 44 percent of people 65 and up.

Some people make the mistake of thinking they don’t need to look at their reports until they’re about to apply for a loan. But by then it might be too late to make a change, says Jeanine Skowronski, credit card analyst at It can take weeks or months to clear an error from a credit report, which means people planning to apply for a credit card or other loan in the coming weeks might have to do so while the errors are still on their reports.

“There’s only going to be so much you can do in a short time frame to improve your credit score,” Skowronski says.

People who don’t know what’s on their credit reports may also struggle when applying for a job or an apartment. That’s because their credit scores, which are based on their credit reports, might be used as a measure of their trustworthiness, she says.

Many people are still rebuilding their credit after struggling financially during the recession. But people who haven’t checked their reports in a while may find some good news.

Certain marks, such as foreclosures, bills sent to collections and late payments, stay on a consumer’s credit report for seven years. Now that we are seven years from the start of the financial crisis, these records may finally be getting cleared from credit reports, says John Ulzheimer, president of consumer education at, a credit management Web site.

The seven year timeline starts from the year a consumer began falling behind on payments, not in the year that the foreclosure or default becomes official, Ulzheimer says, which means people may start to notice the change if they fell behind in 2008 or earlier.

Even people who have generally good credit should check their reports several times a year to check for mistakes, Ulzheimer says. Researchers at the Federal Trade Commission found that one in five people had an error in their credit report.

People who have had their identities stolen — such as those whose tax refunds have been stolen — should be especially vigilant to be sure criminals with access to their personal information aren’t using those details to open fraudulent accounts.

Consumers can access one free credit report a year from each of the major credit reporting bureaus through Some people might spread their credit checks out by pulling a different credit report every four months, Ulzheimer says.

After checking to make sure there are no loans or credit cards that don’t belong to them, people should make sure their payment records are accurate, he says. People who need to dispute errors on their reports should attach evidence, such as receipts or bank statements proving that a payment was made, with their letters to the credit bureaus, Ulzheimer says. Because of changes that were announced in March, credit bureaus will soon be required to review those documents instead of simply agreeing with the bank.

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