HOWTO: Get Your Free Credit Report Online
October is Cyber Security Awareness Month, so here are some tips on avoiding scams and identity theft. Readers often ask me about getting free credit reports online, concerned that they'll be scammed or tricked into paying a fee. So is it true that you can get a free credit REPORT once a year? YES! Read on to learn how it's done, how to avoid the potential pitfalls, and how it's different than your credit SCORE...
What's the deal on free credit reports?
Yes, Virginia, there is a free credit report clause. Back in December 2003, the Fair and Accurate Credit Transactions Act (FACT Act) was signed into law, which gives every U.S. consumer the right to receive a copy of their credit report free of charge once a year.
A credit report provides you with all of the information in your credit file, which is maintained by consumer reporting companies Equifax, Experian and Trans Union. This is the information that is provided by them in a consumer report requested by a third party, such as a lender, landlord or insurance company.
This information includes mortgage, credit card and loan balances, along with your payment history. A credit report also includes a record of everyone who has received a consumer report about you within a certain period of time.
It's a good idea to look at your credit report at least once a year, to make sure the information contained there is correct. Errors in your credit file could affect your ability to get a mortgage, rent an apartment, or apply for a credit card.
If you have items appearing on your credit report that you do not recognize, such as consumer loans and store credit cards, it could indicate that identity theft is taking place. (See also: TEN TIPS: Identity Theft Protection)
Credit monitoring services such as Lifelock will keep tabs on this for a fee and there are services that offer to supply your credit report for a fee. But really, there's no reason to pay for this information!
And here's a practical tip that was pointed out by several readers: Consumers in the USA are actually entitled to get one free report a year -- from each of the 3 credit bureaus. So you can can actually get three reports per year. If you request your credit report from a different credit bureau every 4 months, you can monitor them more closely, rather than just once a year.
Singing, Dancing and Acting
AnnualCreditReport.com was created by the three nationwide consumer credit reporting companies - Equifax, Experian and TransUnion, in accordance with the FACT Act, to provide consumers with the ability to get a free credit report once every 12 months. It's the ONLY service authorized by the credit bureaus for this purpose. (Canadians: click here for credit report info.)
So don't confuse this with other "free credit report" offers that are advertised on radio, TV or online. I'm not saying those companies are pulling a scam, but they DO want to sell you additional services, such as credit monitoring, or identity theft protection. They won't tell you that you can get those credit reports absolutely free, with no strings attached.
And if you're not careful about reading the fine print, you can learn later that you're on the hook for monthly charges you didn't expect. See this NY Times article on The High Cost of a 'Free Credit Report' for more on that.
Credit Report vs. Credit Score
Don't confuse your credit report with your credit score. A credit score (sometimes called a FICO score) is simply a number ranging from 375 to 900, which is derived from the 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.
Most credit scores estimate the risk a company incurs by lending a person money or providing them with a service –– specifically, the likelihood that the person will make payments on time in the next two to three years. Generally, the higher the score, the less risk the person represents.
Your credit score may be negatively affected if:
Only time, and avoiding the things in the list above, will cause your credit score to increase. Although you are entitled to one free credit report each year, you will probably have to pay a modest fee to obtain your credit score. Some banks and credit card companies provide this service for free, so check with your financial institutions before you pay someone else to see your credit score.
Got something to say on the topic of free credit reports or related issues? Post your comment below...
This article was posted by Bob Rankin on 6 Oct 2014
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Article information: AskBobRankin -- HOWTO: Get Your Free Credit Report Online (Posted: 6 Oct 2014)
Copyright © 2005 - Bob Rankin - All Rights Reserved