The Credit Bureaus Give You a Free Credit Report Each Year
The FACT Act passed in 2003 ensured Americans had the right to access their own free credit reports. The three major credit bureaus collaborated to launch a centralized, free service in order to make it simple for people to request their information. You can access your reports by phone, mailed request, or online at annualcreditreport.com. You are able to use any of those channels to request a full transcript of your credit report, free of charge. Each credit bureau must provide your report annually upon your request. This means you can access your credit report up to 3 times a year, using a different bureau each time.
What is a credit report?
A credit report is a collation of personal information that reflects your financial history. A credit report can include your name, address and social security number, along with previous loan applications, repayment histories including missed or late payments, current credit and bankruptcies. It will also include information about being sued or any arrests made.
This information is collected by credit reporting agencies, or credit bureaus. The three major bureaus are Equifax, Experian and TransUnion.
How can I get a copy of my credit report?
The major credit reporting agencies co-created the website annualcreditreport.com. It is authorized by federal law and is the only website that offers completely free credit reports. Other websites that offer ‘free’ reports often have hidden monthly membership fees or other costs associated with obtaining your data. Be wary of websites with similar names or that claim they offer free credit reports. The website annualcreditreport.com is the only website that can offer this service for free.
As mentioned, US citizens are able to request a free credit report from each of the three credit bureaus once every 12 months. Many people choose to stagger the requests so that a new report is acquired every 4 months, ensuring a relatively recent snapshot of their financial status. This level of frequency also adds a small measure of protection against the damage of identity theft as potential incidents would be picked up sooner rather than later.
Additional credit reports may be accessed free of charge if you have had an adverse action taken against you (such as being denied credit, a loan or employment). The notice that alerts you to the adverse action will specify which credit reporting agency to contact, and you must contact them within 60 days of receiving the notice. If you are looking for work, are on welfare or suspect you are a victim of identity theft, you may also request additional free reports.
In order to access your free credit report, you will need to prove your identity. You will need to give your full name, address and social security number. You may need to provide previous addresses if you’ve been at your current residence for less than 2 years. The bureau that you choose to draw your report from will also ask you specific information that only you can know about your financial records. For example, they may ask about the amount of your regular mortgage payment, or for information relating to payments from some time ago. These questions are meant to be difficult to answer without having the appropriate documents in order to protect your data from thieves and scammers.
You can request your free credit report using one of the three following options:
- Visit annualcreditreport.com
- Call 1-877-322-8228
- Complete the Annual Credit Report Request Form and mail it to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.
If you choose to use the website and can comply with data requests, you should be able to access your credit report immediately. Phone and mail requests will be sent out within 15 days of receipt.
Why should I get a copy of my credit report?
It is your right to know what information is being held about your financial history. The information contained in your credit report can have significant influence on your life. It may determine if you succeed in securing a home loan, the interest rates you are charged, and can even influence potential employers about their decision to hire you. It is in your best interest to ensure the information in your credit report is accurate and not being exploited by others.
Every entry on your credit report has an impact on your overall credit score. If information is incorrect, your score may be lower, which can lead to negative outcomes. When you request your credit report you should check it carefully for inaccuracies. Common mistakes include duplicate listings of loans, incorrect credit limits and other out-of-date data. If you do not recognize the name of a creditor on your report, be aware that sometimes debts are sold to collection agencies. Your debt may now be owed to a different company. Store cards may also be listed by the name of the financial institution that underwrites the card.
What should I do if I spot an error on my credit report?
There are two steps you must take to correct data on your credit report. You must lodge a dispute with the credit bureau that released the credit report to you. It must be done in writing. Include copies of any documented proof, be very specific and give them as much proof as they might need to correct the error. Unless they deem the attempt frivolous, they must address the issue within 30 days. It’s in your interest to send the dispute and documentation with a return receipt request so you have dated proof of the dispute.
You must also lodge the same dispute and documented proof to the information provider that supplied the incorrect information to the bureau. (The information provider is typically the institution that created the loan, made an enquiry or reported the erroneous information). The appropriate address should be listed on the credit report. The information provider is also obligated to investigate the claim and if there is an error found, they must contact the credit bureaus to correct the record.
If you have an error corrected, you may also ask the credit bureaus to contact any provider that requested your details over the previous 6 months to have the information corrected. If the report was used for employment purposes, notices of corrections can be sent to inquirers dating back two years.
If the information is found to be correct but you still believe it to be in error, you can add a statement of dispute to your file. The statement will be included with any future reports requested. For a fee, you can ask the credit bureaus to send the statement of dispute to people who requested your file within the last six months.
Spot identity theft
Identity theft is a growing problem in the United States and elsewhere. If your personal information is not secure, it can be stolen and used to illegally take out credit cards and loans in your name. If you do not regularly check your credit reports, you may remain unaware of the theft for some time. As the stolen credit typically goes unpaid, the accrued debts and defaults will impact your ability to secure legitimate loans, employment and insurance. If you notice fraudulent credit activity on your credit report, visit the government website www.IdentityTheft.gov to report the theft and quickly secure your identity.
Who can access my credit report?
The FCRA outlines who may access your credit report. This includes insurers, creditors, employers and businesses that administer evaluations in those areas, including suitability for renting accommodation. You must provide written consent for your employer to access your credit report.
Credit repair scams and genuine counselors
If you have taken an interest in your credit report, you may want to improve your overall credit score. This can be a worthwhile undertaking as the score can be influential in many areas of your life. Unfortunately, scammers know this and often pose as legitimate businesses that offer credit repair schemes. The Consumer Finance Protection Bureau has an excellent summary of tell-tale signs of credit repair schemes. Legitimate credit counselors are registered with the Department of Justice. They should be transparent and should not charge a fee to discuss the services they offer.
Do credit reports share negative information?
Yes, a credit report will maintain negative information for up to seven years, or until the statute of limitations runs out, whichever is longer. Negative information could include defaults, unpaid debts or badly managed credit. Bankruptcies will remain on credit reports for 10 years. It’s important to note that any negative information will be released regardless of time limit if an application is made regarding credit or life insurance of $150,000 or more, if you apply for a job that pays over $75,000 per year, and any information about criminal convictions. Generally, the only way to clear negative information from your report is to wait until seven years has passed since the date of the negative event.
Will I get my credit score when I get my credit report?
No. The FACT Act only requires the credit reporting agencies to offer free credit reports. Accessing your credit score will attract an additional fee from the agencies as the Fair Credit Reporting Act (FCRA) allows this.
What’s the difference between a credit score and a credit report?
The FACT Act does not require credit bureaus to give you access to your credit score. Imagine that your credit score number is like a grade – indicative of your overall performance and your ability to maintain good credit. The credit report is like the notes a teacher would give that outlines the specific activities you’ve done (loan applications, repayment ability and so on) and how well or poorly this has been managed. The score is drawn from the information in the report.
The credit score ranges from 300 to 850, with the higher score being more desirable. Numbers between 700-749 are generally thought to be a good score. Any score between 750-850 is excellent. The figure is derived from 5 types of information collected in your credit report and is weighted in importance. They are payment history (35%), amounts owed (30%), length of credit history (15%), credit mix (10%) and new credit (10%).