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Free Credit Report
Date: Mar 15, 2005
Contributor: Nannie Gade
Ignore that junk mail: Your credit report is free
If the junk mail at your home is anything like mine, a new federal law giving consumers access to free credit reports already is being twisted into a money-making gimmick for financial institutions.
The gist of the mailings: "Sign up with us for a free credit report, and for a small price we'll give you some extras."
The trouble is, you don't have to sign up with any bank, credit-card company, credit bureau or any other institution to get a free credit report. And paying for the extras — like ongoing credit report monitoring — is unnecessary, now that the federal government has enacted a law giving you access to your credit information.
So, look past the solicitations coming your way. Under a new law that has just become effective, there's only one official way to get a free credit report: You simply go to www.annualcreditreport.com, or call 1-877-322-8228.
Solicitations from others may be fraudulent or a pretense to sell you what you don't need, says Edmund Mierzwinski, consumer advocate with U.S. Public Interest Group.
"They are piggy-backing on the new law," he says.
But do make use of the new law, the Fair Credit Reporting Act. Starting this month, it gives you the opportunity to peek each year at the information credit bureaus accumulate about you and distribute to everyone from lenders to insurance companies and employers. If the bureaus have made mistakes about you, it can disrupt your life — for example, keeping you from getting a home or car loan, or forcing you to pay a higher interest rate than need be.
Studies have shown that between a quarter and a third of credit reports contain errors, says Mierzwinski.
It used to cost about $39 to take a look at your credit reports, an expense that always struck me as bizarre. You had to pay money to make sure some credit organization didn't have erroneous or illegitimate information about you.
Congress, in its wisdom, also didn't see any reason why you should have to pay to make sure someone hadn't gummed up your opportunities by reporting falsehoods about you. And so, starting this month, the credit bureaus must give you an annual look for free.
The junk mail at your home will probably keep pressing the idea that you must pay a little extra on an ongoing basis to make sure an identify thief or a sloppy credit bureau doesn't mess up your credit report without your knowledge.
But the way the law is set up, you can be vigilant yourself.
There are three different credit bureaus, which all collect data on you and give you a credit score: Equifax, TransUnion and Experian.
Every year, you can get a free credit report from each of them. But you don't have to get all three reports simultaneously. If you spread out your requests every four months, you can sample each of the three credit bureaus once a year, says Mierzwinski.
If there's a mistake about your credit background, you are likely to catch it — even if you are just examining one credit bureau's report at a time. You should be aware, however, that each of the three gathers its own information, and, consequently, their information may not be identical.
If you get all three reports over a year's period, you should get a fairly complete picture of what your creditors would see if you applied for a loan.
What you won't see is your credit score — the number that grades you on how you handle money. Scores like 700, for example, are good, 600 is pretty good, and 500 needs repair.
While organizations such as PIRG tried to get consumers free access to the scores, too, Congress didn't go that far. So, if you want to see your score, you will still need to pay. You can get all three of your scores from myFico.com.
It is wise to get the full reports and FICO scores within six months of a major purchase, such as a home, says Mierzwinski. Typically, lenders request all three reports. By giving yourself plenty of time, you will have the opportunity to correct errors or improve your credit before a bad report limits your options.
In the past, some consumers encountered nightmares when mistakes showed up in credit reports. But the new law requires credit bureaus to investigate and correct incorrect data within 30 days if a consumer finds inaccuracies. For information about your rights and dispute procedures, see www.ftc.gov/credit.
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