Did you know that you are entitled to request and receive a free copy of your personal credit report from the 3 national consumer credit reporting agencies once each year? This valuable service began in 2005 in response to a law passed by Congress, known as the Fair and Accurate Credit Transactions Act (FACTA). The reporting service is accessed via the website www.AnnualCreditReport.com, which is a run as a collaborative effort among the 3 nationwide consumer credit reporting agencies, TransUnion, Experian and Equifax.
What exactly is a credit report and why should you care about yours?
According to the FAQ’s on the AnnualCreditReport.com website, “A credit file disclosure, commonly called a credit report, provides you with all of the information in your credit file maintained by a consumer reporting company that could be provided by the consumer reporting company in a consumer report about you to a third party, such as a lender.”
In other words, the report contains information about how you have handled bill payment in the past and gives it to companies that are considering giving you credit with them. This can be especially important if you are thinking of buying a home.
This information, whether accurate or inaccurate, can positively or negatively impact your ability to qualify for home and auto loans, credit cards and other sources of credit. Given the large volume of information that flows through these credit reporting agencies, it is not surprising to find that errors occur. The sooner any errors are discovered, the easier it is to correct them and minimize any negative impact on you and your credit rating. Monitoring your records regularly via these free annual reports helps accomplish this goal.
If you are new to this process, here are a few tips worth noting.
First, although you are entitled to a free copy of your credit report, the report does NOT include your credit score. Again, according to the FAQ’s at www.AnnualCreditReport.com, “A credit score is a complex mathematical model that evaluates many types of information in a credit file. A credit score is used by a lender to help determine whether a person qualifies for a particular credit card, loan, or service.”
In other words, a credit score is similar to the grades you got in school. It is based on how you have handled credit in the past.
When you request your reports from one, two or all three of the reporting agencies, you will be given an opportunity to purchase your credit score. You are NOT required to purchase your credit score information in order to receive your report.The price and conditions to purchase your score vary with each agency; you should read the information very carefully before providing credit card information. You might be required to sign up for a credit monitoring service with a monthly fee that renews automatically each month or year, unless and until you cancel the service.
Another important thing to note before you pay for a report of your credit score is that the rating is NOT ordinarily your FICO® score, and the FICO® score is the one most lenders use to determine your credit-worthiness. Although the credit scores you can purchase from TransUnion, Experian and Equifax can give you a general idea of your current standing, they are not the same scores lenders see when they pull up your scores.
A third caution is to watch out for websites that may try to make you believe you are ordering a free credit report when you are not. Several websites have names very similar to www.AnnualCreditReport.com, but are NOT associated with it. The services they offer may or may not be free. Examples include: www.freecreditreport.com, www.freecreditscore.com and www.creditscore.com.
Lastly, if you have concerns about keeping your credit information private online, here is one more resource you may find helpful. The website is www.OnGuardOnline.gov. According to the website, it “provides practical tips from the federal government and the technology industry to help you be on guard against phishing and internet fraud, secure your computer, and protect your personal information.”
If you have other tips related to this topic, please share them in the comments box below.