When I speak to people about credit reports and credit scores one of the things I always do is ask the audience members to raise their hands if they’ve requested their free annual credit report.

Sadly, on a good night only about half the people in the audience raise their hands. A new report from the Consumer Financial Protection Bureau (CFPB) confirmed my simple surveys. Far too few people request their reports each year.

At a minimum you should check your credit report at least once every 12 months. There are a lot of reasons to get it, and here are five:

It’s free. Never pass up a freebie, especially when it can affects your financial health and well-being. Your credit report plays an important part in your credit transactions and many other financial relationships.  Get your free credit report. 

It’s an important step in rebuilding and maintaining good credit. Reviewing your credit report periodically will help you make sure it is in good shape when you are ready to apply for new credit and enable you to monitor your progress if you are recovering from past credit problems.

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It’s an important part of managing your personal finances. You should review your credit report just like you do your bank statements and credit card bills. Managing credit, keeping track of spending and putting aside savings are all essential to being financially successful.

It’s often the first indicator that you are an identity theft victim. If you find names you don’t recognize, Social Security numbers that don’t belong to you, or accounts that aren’t yours, you might be a fraud victim. Experian and the other national credit reporting companies can help you stop the credit fraud and prevent future misuse of your identity.

It’s the first step in correcting any information you feel is inaccurate. The vast majority of the time people find everything is accurate. But if you do find something wrong, your personal credit report comes with instructions for submitting disputes and contact information including a toll-free telephone number, Internet address and mailing address.

I talk with consumers almost every day, and one of the most common questions I get is how to dispute information you believe is being reported inaccurately. The process is very straightforward and simple as long as you follow this step-by-step process. I find that most people who are having difficulty skipped step number 1.

Step 1: Get your credit report directly from Experian
The first step is critical, and it’s the step that causes most people to stumble. You must get your personal credit report directly from Experian before starting the dispute process. A credit report from a lender or other business is not a personal credit report.

There are four reasons Experian requires you to get a personal credit report before entering a dispute.

Your personal report:

A. Provides information you need but that lenders don’t get. Your personal credit report includes a report number you will be asked to provide, instructions for submitting a dispute, and contact information including a web site, toll-free telephone number and mailing address.

B. Ensures you are looking at information from Experian and not one of the other national credit reporting companies. While lenders receive the same credit report information, the report they receive is typically coded for computer review and may be merged with information from the other national credit reporting companies and other sources, such as your credit application. That sometimes leads to confusion and misunderstanding about which credit reporting company provided the information.

C. Ensures you have a current credit report. I often hear from people who are trying to improve their credit history but are working with a credit report that is months or even years old. In just a few months the information in your report can change tremendously. Getting a fresh report ensures you and Experian are looking current information.

D. Enables you to easily understand the credit report. Your personal credit report is in an easy-to-read format that frequently resolves confusion and frustration caused by a report formatted for business review. No special training or knowledge is needed to read and understand your personal credit report.

Here are the ways you can get your personal report:

A. You can get your Experian report free once every 12 months at AnnualCreditReport.com

B. You can also get it free from the credit reporting company used by your lender if you have adverse action taken, such as having an application declined, receive welfare assistance, are unemployed and seeking employment, or live in a state the provides one or more free reports annually at www.experian.com/reportaccess. If you believe you are a victim of fraud or identity theft, you can add a security alert and request a free report at www.experian.com/fraud. For more information visit www.experian.com and follow the applicable links.

C. For a nominal fee, if you do not qualify for a free copy under one of the circumstances described above, you can request your personal report online by visiting www.experian.com/reportaccess

D. By subscribing to a credit monitoring service, such as Experian Credit Tracker, which provides unlimited credit report access, credit scores, monitoring and resources.

Step 2: Follow the dispute instructions provided with your personal credit report.
You can submit disputes online, by telephone or by mail.

It is very important to be specific with your dispute. State exactly what the issue is with an account. Experian’s online dispute system simplifies the process by providing choices for the most common dispute reasons.

Upon receiving your dispute, Experian will contact the source of the information, such as a lender, on your behalf. The source of the information is required by the federal Fair Credit Reporting Act (FCRA) to review its records and respond to the dispute.

Step 3: Allow 30-45 days for your dispute to be completed
The dispute should be completed within 30 – 45 days after it is received by Experian. That time-frame allows documentation to be mailed if necessary. However, most disputes can be conducted through automated processes. As a result, many disputes are completed well in advance of the 30-45 day period.

The source of the information will respond in one of three ways:

A. The information should be updated in response to the dispute

B. The information should be deleted from the credit report

C. The information should remain as reported

Once a dispute is completed you will receive a notice from Experian with the results of the dispute. If you do not agree with the history as reported by the source and cannot reach agreement, you may add a “Statement of dispute.” A statement of dispute enables you to explain why you disagree with how the information is being reported.

Businesses are notified that the statement is part of your report every time you apply for credit or other services. Lenders and other businesses can take the statement into account and may ask you for more details or documentation as part of their application review process.

Three steps is all there is to it. Just make sure the first step you take is getting a new, personal credit report directly from Experian and the dispute process should go smoothly.

Recommended Reading

• 5 Ways to Rebuild Your Credit Score
• You Can “Fix” Your Credit Report Without Help
• There is No Need to Pay to Improve Your Credit

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In the Wall Street Journal, I saw the headline “Economic Reports Fan Fears.”

In the New York Times, the top business story read “In a Shift, Debt Levels are Falling,” noting that American consumers are reducing their debt.

There is merit and editorial integrity in each story – no doubt. As someone who works in the financial services business, I understand that there may be different barometers and reports to gauge our collective perspective on the current economy. But, to the everyday consumer, it might be puzzling. We thought this might provide a good opportunity to remind people that, regardless of the various barometers and reports, one premise remains true: commit yourself to financial literacy.

The average debt held by American consumers older than age 19 is more than $78,000. For the first time in U.S. history total student loan debt exceeds total U.S. credit card debt. Yet, most high school students graduate without having learned to balance a checking account. Young people entering the work force or going to college know how to dissect a frog, but they have never been introduced to critical life skill concepts like the power of compound interest, the cost of credit, or the importance of credit reports and credit scores in their daily lives.

A basic understanding of these essential concepts empower everyone to make better decisions about money, leading to greater financial success. According to some, that in turn leads to reduced stress and even better overall health and greater general happiness.  To improve your financial literacy, visit www.LiveCreditSmart.com.

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