Checking Your Credit Report? Here's One Section to Pay Extra Close Attention To

Your credit report may not be the sort of reading you want to curl up with on a stormy night. But it's an important read nonetheless.

Your credit report is a summary of your borrowing history. And you're entitled to a free copy of your credit report every week from the three reporting bureaus -- Experian, Equifax, and TransUnion. You can access yours at AnnualCreditReport.com.

Checking your credit report every week is probably overkill. Rather, a more reasonable approach is generally to check your credit report once every three to four months.

Part of the reason it's important to do that is to make sure you're current on your debts and that you have a healthy credit mix. But it's also important to monitor your credit report for fraud. And there's one section of that report in particular that you'll want to keep a close eye on.

Always look at your hard inquiries

Any time you apply for a new loan or credit card, a hard inquiry is done on your credit report. That's a lender's way of verifying your credit history and making sure it's not taking on too much risk in loaning you money or extending a line of credit to you.

Incidentally, a hard inquiry can result in a hit to your credit score. Usually, though, that hit is mild, ranging from about five to 10 points. So a single hard inquiry every so often shouldn't do much damage or limit your ability to borrow when you need to.

Meanwhile, it's important to look at the hard inquiry section on your credit report to make sure anything listed there is an inquiry you recognize. If there's an inquiry you don't recognize, it's an indication that someone has tried to open a credit card or loan in your name (either that, or it's a mistake, which should also be addressed, too).

Keep in mind that your credit report may contain a soft inquiry section. This is a section you don't have to worry about as much.

Sometimes, credit card issuers will do a soft inquiry to see if it makes sense to try to send you offers. A hard inquiry, by contrast, comes as a result of an actual credit application. So if you see one you don't recognize, it's important to take steps to protect yourself from further fraud.

What to do if you see fraudulent activity on your credit report

If you see a loan or credit card application on your credit report that you didn't put in, don't panic. But do take action.

First, contact the credit bureau listing that line item to make sure it wasn't a mistake (and make it clear that you didn't apply for the loan or credit card in question). From there, contact the lender or credit card company and try to get details. You'll also want to let the lender or credit card company know that the application was fraudulent.

Once you've done that, it's a good idea to report your incident of identity theft to the Federal Trade Commission. From there, you'll generally get a recovery plan with steps to take.

One step it definitely pays to take is freezing your credit. This prevents criminals from taking out another loan or credit card in your name, because what will happen is that the issuer will be barred from doing a hard inquiry until you unlock that freeze.

You may also want to put a fraud alert on your credit report. You can usually do this by creating an account with each credit bureau and following the steps they give you.

Finally, you'll want to check your existing credit card and bank accounts to make sure there's no suspicious activity. If there is, report it at once.

Since credit reports aren't something most people look at every day or week, when you do sit down to review yours, don't rush through it. That report contains some vital information about your financial picture. But make especially certain to pay close attention to the hard inquiry section, and act quickly if anything there doesn't look right.