Big Event Budgeting and Credit Monitoring: What to Know Before You Swipe

17:03Sean Pyles:Greatly appreciated, Montgomery. All right, Amanda, let's start with the basics. Let's start simple. What's the best way for people to get their credit reports? So everyone is able to get free weekly credit reports from each major credit bureau. So that's Experian, Equifax, and TransUnion. If you use this website, annualcreditreport.com. Now, when you go there, it looks a little outdated, okay? But that's the right website. Very outdated. It looks like it's from 2005. You might think you're being scammed, but we are not scamming you here at NerdWallet, right? We do not fall for scams. So if you go through that website, you'll have to enter your name, your address, your social security number.

17:44And because that's all highly confidential information, just really important to make sure you're in the right place.

17:50Sean Pyles:And one more time, it is annualcreditreport.com. Absolutely right. All right. What information do people need to have on hand to get their credit reports through annualcreditreport.com? You'll need your name, your current mailing address, your email, and a phone number. If for some reason they can't verify your identity, like they're going to try to send you a text or an email, and if that doesn't come for some reason, sometimes you know it's slow, you'll have to answer some more in-depth questions to be verified. So this happened to me recently. And they asked me questions like, which company has your mortgage or which company has your auto loan and what those rough payment amounts are.

18:28So those are some pretty in the weeds questions. But hey, if you're paying your bills on time every month, you will know those answers.

18:36Sean Pyles:Amanda, there are a lot of places where credit card users can get their credit scores, including through their own credit card issuers online portals. Like when you log into your credit card account, you'll have no doubt seen these promotions for accessing your credit scores from the credit card issuer. And I think this is a nice free perk, but there's part of me that views this as a secondary source. while the credit bureaus or annualcreditreport.com are a primary source. Do you agree with that? And how do you view the info that you get from a credit card issuer versus straight from the credit bureau?

19:07I see what you're saying here. And in my mind, they're all kind of fair game. It's not always true that you'll get your credit score as part of your credit report. Oftentimes, those two things are totally separate. Your credit score is calculated using the information from your credit reports, but those calculations are made by FICO and Vantage Score. so totally separate from the credit bureaus. I don't think that there's anything wrong with using a bank or other personal finance app or anything to get your credit score. It's a source that you can use to check in. A lot of times those are convenient.

19:42Like I know for me, I tend to rely on my bank app for my credit score because I'm regularly popping in to pay bills, to sort of just manage my money. And the thing is you're only maybe getting one score of many, but at least you're kind of managing it.

19:57Sean Pyles:And most likely the user interface is a little bit better on the banking apps versus annualcreditreport.com, which again, as we said, is old looking. Now, I totally understand the impulse to get your information from reliable secondary sources. The only other thing to consider is that, and I mentioned this, your bank or credit card app likely only provides one kind of score. So either a Vantage score or a FICO score. So you'll need another place to look to get the other score. In my experience, FICO is the most widely used credit score, but it's the hardest to find. And often you have to pay to get it.

20:31A lot of the times when you're getting a free score, it's a Vantage score. Not always, but a lot of times. So just kind of next time you're popping in one of those apps, pay attention to which credit score it is and see if you can find the other one for free. It's like a challenge.

20:44Sean Pyles:Even though you might have to pay for a FICO score, I would maybe discourage people from doing that because there's likely not going to be a huge spread between your Vantage score and your FICO score. Absolutely right. Okay, so getting your credit report and your score is just one part of this process. Actually understanding what's on it and knowing how to read your credit reports is a pretty different experience. so we're going to do a little live demonstration right here on the episode where we go through my Experian credit report on the podcast and by the way we've also got an article on nerdwallet.com that will take you step by step through the process of reading your credit report and we'll link to that in the show notes but back to my credit report Amanda Elizabeth you should have copies of my Experian credit report so let's go through it and see what we have here this feels illegal.

21:31Sean Pyles:I know, but I'm giving you consent to look at my personal information. And there's nothing like my social security number on here, just my debts and my various addresses. But looking at it, I mean, it starts out with my FICO score. I got this for free by going to Experian's website and logging in. So they have that. Again, didn't pay for it, even though they tried to get me to pay for it, which I'll get to in a little bit. And then what's kind of interesting is that it starts by showing that I have 12 open accounts and my total balances are $240 ,000 roughly, which sounds like a lot of debt until you remember that that includes my mortgage, which is the bulk of it.

22:10Sean Pyles:And then it has different credit card accounts listed, the balances and the date that the balances were updated. And then scrolling through, one thing that really stands out to me are all of the ads. There are a number of different accounts that they're trying to get me to sign up for. And that is a little bit icky to me. But then going down, I see my mortgage here. It wants me to unlock my home's potential, likely by getting some sort of debt product from them or one of their partners. It has my student loans. It says that I have zero in collections, which is great and is what I thought. Two inquiries into my credit reports because I recently applied for a credit card.

22:48Sean Pyles:And it says that my credit file is unlocked. And Amanda, when we had you on the podcast a few weeks back, we talked about credit locks, which are sort of the shadier, less secure version of a credit freeze. My credit is frozen, but notably it doesn't tell me that on my credit report, which I find really sketchy and annoying. Okay. You got this credit report by going to Experian, right? Yeah. Okay. I would love for you to go get it through annualcreditreport.com and see if it looks any different. Because in preparation for this episode, got my three credit reports from annualcreditreport.com and they looked a little bit different.

23:29They were really long. And this has like hard inquiries, right? Like where you've applied for a credit product or a loan product and they've inquired on your credit. The ones that I pulled for myself had listed all the soft inquiries. So like just people who were like trying to send me a credit card offer in the mail who like wanted to peek at my credit to see if I don't like that. Yeah. So it was a little more detailed, but they also showed, and I'm trying to remember, cause I pulled all three. It did say that my credit was frozen. So I'm wondering if there's some scammy stuff going on, sneaky stuff going on here to make you feel like your credit is not secure by not, by not putting that it's frozen, but saying, Oh my gosh, it's unlocked.

24:13You just purchase this, right? Right. Then everything will be secure. That's interesting. Huh.

24:19Sean Pyles:That is really interesting. Yeah, because I've also viewed my credit report through annualcreditreport.com, and it looks like some sort of legal document you would have received in 1993. Absolutely. I mean, but it's on brand. It's on brand. Yeah. Like, if that's the website, then that, of course, is what the actual finished product needs to look like, right? Well, Sean, I think one thing that stands out to me about your credit report here is it looks like AI. What do you mean? There's nothing wrong on your report. So are you sure this is a genuine one or did you put this in AI? You know, I'm just that good.

24:54Sean Pyles:I just have such stellar credit habits that there's nothing wrong. I'm doing a phenomenal job. Sure. You absolutely are. And you have to tell us how you are keeping your credit usage at 2%, Sean. What are you doing? Well, it's at 2 % because if you look at my list of credit lines, you'll see that my total available credit is a whopping$94 ,000. So 2 % of that isn't a lot of money. It's also a little scary that I have access to that much credit. One thing I think about a lot is that it's just way too easy to get into debt in this country. And I think having this massive credit limit across various credit cards really speaks to that.

25:33Sean Pyles:So yeah, I still have balances that are around$3 ,000 total of this payment period as of the dates that the balances were updated on my credit report. That's not nothing. I mean, I paid it off and I pay off my balances on a basically weekly basis. But I just am accruing a small amount of credit utilization based on the vast amount of credit that I have available. But even still, it's saying add to your$94 ,000 credit limit, you could improve your credit usage and increase your FICO score with a new card. Crazy. Crazy. So like there's a certain level of self-protectionism that you need to have when you're reading these credit reports.

26:14Just kind of know that like, look, these are businesses. There's no other alternative. We need them to provide this information. There's no other way to get it. But they're also selling you products and services. So just be a little skeptical of those offers that are embedded in these reports.

26:30Sean Pyles:And so as much as you are looking to your credit report to make sure that everything is what you think it should be in terms of your credit files and your credit score, you need to be aware that these credit bureaus have ulterior motives too. So I'm thinking we might also want to talk about some red flags that people might want to look out for on their credit reports. What do you think people should really be looking for here? Something I will say, which happened to me, I think a couple of years ago, was that there was a mix up in identity. So me and my mother have similar names, and they had some of my mom's credit history on my credit report.

27:02So I had to call to make sure that they separated the two. So just make sure that you don't have, you know, anyone else's information on your credit report or maybe someone in your family, and they're not mixing up your information.

27:13Sean Pyles:And you have an uncommon name, Elizabeth. Like, how many John Smiths have other John Smiths information on their credit reports? I know. Well, my mom, I guess she just loved me so much. And, you know, so she named me the same name as her, you know. So our middle names are just different. I mean, for me, one of the first things that I looked for, I mean, I wanted to make sure that I recognized all of the names of the accounts. And sometimes they're not always intuitive. Like, what is this? I had to type it in. Oh, OK. I know what that card is or what that account is. But I just want to make sure I know what all of those are.

27:42I also want to make sure that I'm scrolling down and like, do I have a collections against me? OK, no. Are there any public records? Like, that's where bankruptcies would appear. other sort of really damaging things to your credit would appear in that section. So just like scrolling down and monitoring, I need to know what's going on here. If there is information in those sections and it's not related to your activity, that again could be a sign of identity theft or fraud. So you want to monitor that as well. The one thing that I don't think you should worry about is that if your maiden name appears or if they only have an employer from 10 years ago.

28:23I mean, like I said, I pulled all three of mine. None of them were updated in terms of my employer. Only one of them, one of my reports had my employer and it was a company I worked for for one summer in 2007. So again, employers don't report to credit bureaus, lenders do. So that doesn't affect your score at all. So here's the thing. If you've gone through these reports, you're holding up your magnifying glass, you're making sure everything checks out, and you find an error. You'll want to first check to see if that error exists on the other two credit reports. Then start the dispute process with the bureaus where that mistake is being reported to.

29:06So it could only be one credit report. So let's say it only appears on your Experian report. Great, less work for you. You just have to dispute with Experian. If it shows up on all three, okay, you've got three different dispute process to go through, but that's okay. You're going to want to do that quickly. You can do it online. You can do it by phone or by mail. The good news is that we have step-by-step guides on how to go through the process with each bureau. We're going to link to that in the episode description. So if you find yourself in that spot, you'll know exactly where to go. Now let's scurry along to our second listener's question, which comes from Peter, who sent us an email.

29:43Hi nerds, long-time listener, first-time question asker. Thank you for all you do to help people understand how to have a healthy relationship with their finances. I recently logged into the websites of the three major credit bureaus, Experian, TransUnion, and Equifax. Using logins, I've had for years to easily freeze and unfreeze my credit. On all three sites, I noticed they want me to upgrade my account in order to see credit details, including my credit score. On one site, I could pay 99 cents to see my credit score. On another, they said I had a legal right to see my credit report, but didn't show any score.

30:18And on the third, I couldn't really see anything without upgrading my membership. What's going on here? Am I crazy or did I used to be able to get a free credit report from each? Inclusive of my score, once a year, and wasn't this mandated by law? Thanks for any light you can shed on this. Peter.

30:35Sean Pyles:Okay, so Peter's question came in as I was working on this episode, and I'm really glad that it did because it gets to one of my biggest pet peeves in the personal finance space, which is that in my humble opinion, credit bureaus are honestly not that much better than glorified scammers who try to nickel and dime us at every opportunity. And Amanda, again, like I mentioned before, when we had you on a talk about credit locks and credit freezes, we ran into the same issue. And it seems like you can't really try to access your credit reports through one of the main bureaus without them trying to push some sort of financial product on you.

31:07Sean Pyles:So can you talk us through what is going on here because we all should be able to view our credit scores for free, correct? You should be able to view your credit reports for free. So I think one of the big things about this question is the conflation between credit scores and credit reports because they're two different things and they're produced by two groups or two sets of financial institutions. Everybody has a legal right to see their credit reports for free using that wonky old website annualcreditreport.com, and your credit report might but doesn't always have your credit score on it. Your credit scores are calculated using that information from the credit reports by FICO and Vantage Score, and those show up in a variety of places for free and sometimes behind some kind of a paywall.

31:57So we talked about your banking app. We talked about free personal finance apps. NerdWallet, for example, offers a free score and a free credit report. So there are places to get that. But to say that you're mandated by law to see your score, no. But you are legally mandated to get access to free credit reports.

32:17Sean Pyles:And at this point, credit scores are so ubiquitous. You can turn any corner in a banking app and then boom, there it is. I think it's really important that we kind of hold each of those in one hand, right? They're related. They're very much related. but they're separate products or separate pieces of information that are part of your larger financial picture. Yeah, that's important to clarify. Why not make it more complicated? It's to say that you have a couple scores. You have a FICO score, you have a Vantage score, you have a FICO Auto score. There's a Vantage score 3.0. There's a FICO 10T. I'm already confused.

32:53My head is spinning. Right.

32:54Sean Pyles:But for most people, they don't need to worry about those, right? Because something that people forget is that credit scores were not intended for us to ever view them originally. They were intended for lenders to see. Just winnow it down to the basics. Find your FICO score and your Vantage score. Likely they're the most two most popular scoring versions, right? Like FICO is releasing, oh, we have a new calculation every couple years, right? But most likely the ones that you can find on your bank app or on a personal finance app are the most widely used versions. and they're probably not too dissimilar from one another.

33:29Well, I think this is a good segue to another part of Peter's question. They asked if it's legally mandated that we can access our credit reports, including our credit scores annually. I know you've touched on it, but can you walk us through the law itself, Amanda? So free credit reports are a legal right. Free credit scores are not, except in a few circumstances, which I'll talk about in a second. The Fair Credit Reporting Act gives you the right to see what's in your credit report. Before the pandemic, you could only request a credit report from each bureau once a year for free. But during the pandemic, the bureaus began offering free weekly credit reports.

34:05And in 2023, they made this a permanent benefit. So that was, hey, a silver lining of the pandemic, shall we say? So a minute ago, I mentioned that there are a few special circumstances where you can get additional free credit reports. And those include like if you place a fraud alert, if you're on public welfare assistance, or if you're unemployed and you're planning on applying for a job within 60 days, that gives you a chance to clean up your credit report. If you've had a hardship, you can craft a statement that, you know, if you're an employer, you suspect they might inquire about that. Gives you time to prepare.

34:39If you've been denied credit, you're also entitled to a free credit report from the credit reporting company that was identified in the notice. So those are some special circumstances where you can get an additional one on top of those free weekly ones. You don't automatically get your credit score for free, at least not by law. The only time a lender has to give it to you is if you're turned down for credit or offered worse terms. So you'll get what's called an adverse action notice, and your score will be included as part of that. And you can always buy your score straight from the credit bureaus or from FICO or Vantage Score.

35:13So in summary, guys, you do not need to pay to get your credit report or your credit score. Are there any specific nerdy websites or nerdy apps that you want to plug that can show people their credit information for free, Amanda? I'd be doing such a service if I didn't mention NerdWallet. NerdWallet offers a free Vantage Score 3.0 and a free TransUnion credit report. So if you're out there, you're listening, you now have one place you can turn for a reliable free option to get this important financial information.

35:44Sean Pyles:All right. Well, Amanda, thank you so much for coming on and breaking all this down for us because it seems simple, but it can get really confusing really quickly. And folks need a good reminder that you don't have to pay for this stuff. Absolutely. And Sean, you know, thanks for giving us a window into your financial life. I mean, squeaky clean. I'm always happy to brag about my perfect credit report. And you know, we didn't mention, And we said that my credit score is on here, but I just want to really lay it out there. My credit score as of the day I pulled this report was 831. It's AI. All right.

36:13Thanks for having, thanks for coming on, Amanda. I'm kidding. I'm kidding. Amanda's rolling her eyes. She's ready to leave. Okay. No, really and truly, let's get it on the record. Okay. We'll check back in a couple months after your honeymoon and we'll see what that credit utilization is done. Oh yeah. That usage is about to spike up. I can see it now.

36:29Sean Pyles:I'm going to enjoy every swipe or tap. Good. Good. As you should. All right. Well, that's all we have for this episode. Remember, listener, that we are here to answer your money questions. So turn to the nerds and call or text us your questions at 901-730-6373. That's 901-730-N-E-R-D. You can also email us at podcast at nerdballet.com. And we want you to join us next time to hear about how to manage your finances when you budget differently than your partner. Follow Smart Money on your favorite podcast app that includes Spotify, Apple Podcasts, and iHeartRadio to automatically download new episodes.

37:04Sean Pyles:Here's our brief disclaimer. We are not your financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances. This episode is produced by Tess Viglin. Hilary Georgie helps with editing. Nick Kersame mixed our audio. Huge, big thank you to NerdWallet's editors for all of their help. And with that said, until next time, turn to the nerds.

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