Checking Your Credit Report
Where to
start
www.annualcreditreport.com. This
site is run by Central Source, a
joint venture among the three
credit bureaus to process free
credit reports. Or you can call
toll-free or order by mail, and
the reports are sent to you
within 15 days.
If you're
ordering online, it's best to
type the address directly into
your Internet browser rather
than clicking on a link from
another Web site.
Some consumers
have reported trying to get
their free reports by going
through the individual Web sites
of the three credit bureaus. But
they first have to wade through
pages with advertising for
expensive monthly
credit-monitoring programs and
other services to get the free
report, said Norma Garcia of
Consumers Union.
Other consumer
advocates warn that it's likely
fraudulent operators will set up
their own sites to scam
consumers.
Don't respond
to offers from people or
companies to get your credit
reports for you. "We tell people
this is something you're going
to have to initiate on your
own," Garcia said.
Consider
setting aside a chunk of
uninterrupted time so you'll
have a chance to thoroughly
understand what you're seeing.
Garcia also recommends doing
this from your home computer
because you'll need to have
certain financial information
handy to answer security
questions.
Personal
information
Now, swallow
hard. You'll be asked a series
of personal questions to make
sure it's really you, including
your birth date and Social
Security number. Central Source
says its security protocols and
measures protect personal
information from unauthorized
access or alteration. A notice
says the Social Security number
is encrypted for additional
protection. And you can request
that just the last four digits
of that number appear on your
printed credit report.
Order all
three?
Next, you'll
be asked which bureau's report
you'd like to see. You can
choose to just look at the
information online or print the
complete report. (The reports
can run to dozens of pages.) You
can choose to see all three at
once -- advocates recommend this
if you're planning to make a big
purchase in the near future.
Or you can
space out the three reports
during the year. This is helpful
for monitoring your credit
reports for evidence of identity
theft or fraud.
Remember, you
can request only one free credit
report from each bureau every 12
months.
Three
approaches
You'll be
redirected to Web sites set up
by each of the three credit
bureaus. Each will ask you a
series of personal questions to
validate your identity: the name
of your mortgage lender and
amount of your monthly payment,
or the amount of your auto loan,
for example. Each Web site has a
different look and feel.
- Experian
has a handy summary report
that shows the number of
"potentially negative" items
in your report and number of
accounts in good standing.
- Equifax
shows an exhaustive list of
accounts, what type they
are, when they were opened,
the balance and credit
limit, last payment and
account status.
-
TransUnion uses a
color-coded series of boxes
to show which accounts are
current and which are
overdue.
All show who
else has been looking at your
credit report -- credit-card
companies seeking to preapprove
you for a credit-card offer,
mortgage brokers or lenders
trying to determine the terms of
a loan, or existing creditors
reviewing your account.
All offer
links for disputing
credit-report information or
reporting an error. You'll also
get the address and sometimes
the phone number for each
individual creditor, handy if
you need to follow up on an
error. And you're offered the
option of submitting a "personal
statement" where you can explain
your credit report in your own
words. The statement remains on
file for two years. The sales
pitches
Along the way,
you'll also have to contend with
multiple offers for fee-based
products and services. You don't
have to buy them to get your
free credit reports.
The credit
bureaus have loaded up their Web
sites with offers for monthly
credit-report alerts, credit
rankings, home valuators and
more.
Credit experts
say one additional purchase you
might want to consider is your
credit score. This is the number
most lenders look at to decide
whether to give you credit and
on what terms.
You can buy
all three credit scores, or just
one. If you buy just one,
consider spending $6.95 for your
FICO-based credit score,
available through Equifax. FICO
stands for Fair Isaac Corp. and
is sometimes referred to as the
gold standard for credit scores,
the one that carries the most
weight with lenders. (The other
scores cost slightly less.)
The credit
bureaus will be persistent in
trying to get you to buy
additional products. On its Web
site, Equifax has a pop-up ad
for its FICO score. Even if you
choose "no thanks," the offer
pops up again along with
additional advertising for other
services.
TransUnion
offers to send you a free
monthly newsletter with tips on
managing your credit -- and if
you sign up, you're also opting
in for alerts to be sent to you
about other TransUnion products.
A small box next to the
newsletter offer is
automatically checked "yes";
you'll have to click again to
uncheck it if you don't want to
sign up.
Online
troubles
Some consumers
have reported the online system
crashed when they were trying to
see their credit information.
This was a particular problem
right after the new system was
launched in December; most of
the complaints to the FTC came
in the first few days.
When consumers
tried again later, some got a
message saying they already had
gotten their free report and
wouldn't be eligible again for
12 months.
FTC
spokeswoman Jen Schwartzman said
the agency is monitoring the new
system and the volume and nature
of consumer complaints. The
bureaus have been especially
concerned when they hear from
consumers who have been denied
access to free reports because
of technical problems online.
She recommends
that consumers call the
toll-free number to report
problems and work with
customer-service
representatives.
Free credit
reports
How to order
them: You have three choices:
- Online at
www.annualcredit report.com
- By phone
toll-free: 1-877-322-8228.
- By mail:
Annual Credit Report Request
Service, P.O. Box 105281,
Atlanta, GA 30348-5281.
If you want to
receive the reports by mail, you
must mail in a request form
available on the Web site of the
Federal Trade Commission:
www.ftc.gov/bcp/conline/edcams/credit/docs/fact_ac
request_form.pdf.
For more
information: Check out the FTC's
Web site:
www.ftc.gov/bcp/conline/pubs/
credit/freereports.htm. You can
also make a complaint online at
this address.
Consumers
Union has prepared a helpful
report, "Your Credit Matters,"
available free online:
www.consumersunion.org/issues/creditmatters.html.
The nonprofit consumers
organization also is conducting
a voluntary survey available at
that address about consumer
experiences in ordering and
reviewing their free credit
reports. The group plans to
share survey results with the
FTC in coming months to improve
the process.
You'll need
time, patience and a measure of
caution if you plan to take
advantage of a new federal law
to obtain free credit reports
from the three major credit
bureaus. Consumers in 13 Western
states were the first to be
eligible for the free reports in
December under the Fair and
Accurate Credit Transactions Act
(FACT). The rest of the states
will be phased in throughout the
year, until residents in all
states are eligible Sept. 1.
Kentuckians became eligible on
June 1.
But getting
your reports won't be
particularly quick or painless.
You may feel
squeamish about providing all
the personal information
required. You'll have to wade
through dense, sometimes
confusing detail on your credit
history.
Some consumers
report running into technical
problems that prevented them
from ordering reports online.
And watch out
for pop-up offers for fee-based
products and services you may
not want or need.
Still,
consumer advocates say it's a
powerful tool for understanding
your credit record and its
effect on your finances.
The new law
says every consumer is eligible
for a free annual copy of the
credit report maintained by each
of the three nationwide credit
bureaus: Experian, Equifax and
TransUnion.
This is
different from your credit score
-- the number calculated on a
scale between about 300 and 925
that most lenders look at.
You'll still have to pay a fee
to get a look at your credit
score, also available from the
three bureaus.
The law is
meant to let consumers see what
lenders and others see when
deciding whether to rent you an
apartment, give you a job or
give you the best rate on a
mortgage.
It's also
supposed to help consumers spot
identity theft by letting them
see a list of all credit
accounts open in their names.
"It's worth
it," said Norma Garcia, senior
attorney in the West Coast
office of Consumers Union, a
non-profit consumers
organization. "It's your
information, and it makes a
difference in whether you get
certain services or privileges
and what you're going to pay."
Garcia said
her group is concerned that
consumers might feel pressured
or tricked into paying for
additional services such as
monthly credit monitoring that
they might not need.
"They're not
necessarily interested in making
it as easy as they could for
people to get their credit
reports. ... Our sense is it
shouldn't be so hard."
Q:
How can I improve my credit
standing?
A:
"If you have a lot of credit
outstanding compared to your
limits, or if you pay late --
those are the worst things you
can do," said Ed Mierzwinski of
U.S. PIRG, the national office
for WashPIRG, the Washington
State Public Interest Research
Group.
Here's what
credit bureaus and consumer
advocates suggest to build a
good credit score:
- Pay your
bills on time; late
payments, collections and
bankruptcies have the
greatest negative impact on
your credit score.
- Keep your
account balances below 50
percent of your available
credit. Pay down credit
balances with what you can
afford (more than just the
monthly minimum, if
possible).
- Close
some old or inactive
accounts if you have quite a
few open -- but don't close
the oldest accounts listed.
That helps establish your
history of active credit
use.
- Watch the
frequency of credit
applications. A large number
of applications for credit
might prompt a large number
of "hard inquiries" by
lenders for your credit
report. And that might
signal that you're having
money troubles or
overextending yourself.
However,
multiple applications for the
same kind of credit in a short
amount of time -- say, if you're
shopping for a good deal on a
car -- are not supposed to weigh
against you.
Q:
But I heard it's good to carry
some debt so lenders can see you
handle it responsibly.
A:
Although it's generally good
advice to pay off your credit
cards, Norma Garcia, of
Consumers Union, said young
married couples with just a
mortgage might want to carry a
small balance on a credit card
and pay it off regularly so
their record reflects more than
just their mortgage history.
And younger
people just starting out with
credit may want to be
particularly careful about
paying bills on time and not
applying for too much credit
until they've established a
track record of managing the
debt they already have.
Q:
If I pay off an old debt, will
that add a certain number of
points to my score?
A:
Each credit bureau uses a
slightly different process for
deriving its credit scores.
Key factors
influencing your credit score:
number and severity of late
payments; type, number and age
of accounts; total debt; and
recent inquiries.
Credit scores
do not reflect your race, gender
or marital status; your age,
occupation or employment
history; your salary or amount
of savings.
Q:
If you have a bad credit spell
-- a period where you didn't pay
on time or ran up big bills --
how long should it take for your
credit score to recover?
A:
"You can't erase your credit
history," Equifax spokesman
David Rubinger said. Most
information stays on your credit
report for seven years. That
includes late payments,
collections and small-claims
judgments. Bankruptcies stay on
for 10 years. Unpaid tax liens
remain for 15 years.
"Hard
inquiries" from creditors or
lenders when you've applied for
credit stay on two years and can
cause a drop in your credit
score if there are too many.
(It's
considered a "soft inquiry" when
you look at your own credit
report or when a company looks
at it to make you an unsolicited
promotional offer; these
inquiries don't affect your
credit score.)
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