Better Budgeting: Free Credit Reports and Credit Scores

Free Credit Reports and Credit Scores

Living a Better Life® (from the editor's desk)
by Michelle Jones

In general, it is wise to check your credit report for accuracy each year. Seeking a new loan? Verifying that your credit information is correct before you apply could be critical. Credit reporting errors are common and can be quite embarrassing. Just one small error on your report could damage your credit and bring your CREDIT SCORE down. That's the information loan companies use to decide your interest rate. The better your score, the better your rate.

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Let's look at how credit scores work and how you can get yours completely FREE every year so you can fix errors that might be on your report, on your own. (No fees, no monthly obligations from credit reporting services.)

What is a Credit Score?

Your Credit Score (also known as a Beacon Score, Emperica Score, or Fico Score - from Fair, Isaac and Company), is essentially an estimate of your CREDIT WORTHINESS to lenders. It is the information they will use to determine how much money you can borrow and how low or high the interest will be; for the life of the loan.

Credit Scores are based on your personal credit history and can change easily, for better or worse.

What Affects MY Credit Score?

Here are some things that will affect your Credit Score:

Positive

Steady employment (your bills will likely be paid on time)
Active credit use with a few accounts
Timely payments
Using less than 80% total amount of credit available
Few requests for new credit*

Negative

Periods of unemployment (your bills may become late and even in default)
Too many requests for new credit*
Multiple credit card accounts
Bankruptcy, Collections, Judgments, Defaults, Liens, Foreclosures
Small finance loans (possibly implying loan consolidations because you're in trouble)
Late payments, missed payments
Using more than 80% total amount of credit available
Total outstanding credit

* When a consumer asks for his/her own Credit Report, it does not hurt the Credit Score.

Why Does MY Credit Score Matter?

Even if you are not applying for a loan any time soon, it is important to keep your credit in good shape and make sure there are no errors on your report.

Banks and credit companies are not the only ones looking at your Credit Score.  In addition to all lending institutions, your Credit Score may be taken into consideration by current and future employers, insurance companies, rental agencies and even home or apartment landlords.

What ARE the Numbers?

Credit Scores have a wide range, 300 to 850, but the following levels are the most common.  In order to get the best interest rate on a new loan you'll need to be in the top 2 levels, and preferably the top...

850-720 (This is the ideal range!)
719-700
699-675
674-620
619-560
559-500
499 or below are considered "sub lenders"

How Do I Get a FREE Copy of My Credit Report?

You can get a free copy of your credit report every year at AnnualCreditReport.com. (Note: This is the ONLY free place to get your credit report with no strings attached!)

There are many other companies and websites with similar names so be careful. This company has been established by the three major Credit Bureaus in accordance with the guidelines of the FCRA from the U.S. Government. Which means that we all have access to our credit reports on an annual basis, for FREE.
Also, if you have been denied credit for any reason, you may request a free copy of your credit report from all 3 of the major credit bureaus; Equifax, Experian and TransUnion. Please continue reading for more information.

You can order your credit report once a year from each of the three Credit Bureaus every 12 months, or you can order them throughout the year at different times, ONE at a time.

"The Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — to provide you with a free copy of your credit report, at your request, once every 12 months. The FCRA promotes the accuracy and privacy of information in the files of the nation’s consumer reporting companies. The Federal Trade Commission (FTC), the nation’s consumer protection agency, enforces the FCRA with respect to consumer reporting companies. A credit report includes information on where you live, how you pay your bills, and whether you’ve been sued or arrested, or have filed for bankruptcy. Nationwide consumer reporting companies sell the information in your report to creditors, insurers, employers, and other businesses that use it to evaluate your applications for credit, insurance, employment, or renting a home." - FTC.gov

Equifax is considered the main Credit Bureau and most widely used by loan companies, but it's also a good idea to get your report from all three companies because they may include different information - as they do not report to each other.  Also, if you're married, each spouse should order a copy of their own report - if there is a mistake on one spouse's report it is likely to be on both.

Free Annual Credit Reports
US consumers can get their credit report for FREE once a year!
Call toll free: 1–877–322–8228
Hearing impaired TDD service: 1–877–730–4104
Annual Credit Report Request Service
PO Box 105283
Atlanta, GA 30348-5283
AnnualCreditReport.com

This free Annual Credit Report company is sponsored by the three major Credit Bureaus... Equifax, Experian and TransUnion.

If you have already ordered a report in the last 12 months and would like to order a new one, you may contact the credit bureaus directly...

The Three Main Credit Bureaus

Equifax
1-800-997-2493 or 1-800-685-1111
P.O. Box 740241
Atlanta, GA 30374
Equifax.com

Experian
1-888-397-3742
P.O. Box 9595
Allen, TX 75013
Experian.com

TransUnion
1-800-888-4213
2 Baldwin Place
P.O. Box 2000
Chester, PA 19022
TransUnion.com

How Do I Correct ERRORS on My Credit Report?

Credit Bureaus are simply recording agencies who are paid by those seeking your credit report.  Federal laws have been put in place to protect you, the consumer, and they are very much in your favor.

In other words, they do not have legal powers over you and are usually very easy to work with. It's usually just a matter of taking the time to make sure your information is being recorded correctly. And not doing so can be very costly.

After receiving your credit report, sit down with some good lighting and review every fine print detail thoroughly. If you have established a lot of credit it can be a bit tedious to check the entire report, as they include information going back 7-10 years. However, it will be well worth your time.

If you find any errors on your credit report that need to be corrected (or old accounts you would like to be removed - which they may or may not be able to do), simply fill out the information on the correction pages included and mail them back.  You will also have the opportunity to update your employment history and contact information.

After returning the forms, you should receive an updated copy of your credit report in a few weeks, along with an explanation of any changes they made. If there was a true error on your credit report, they will remove it promptly. If for any reason they did not correct the error as you requested, send them a second more detailed letter explaining in full why it should be removed. That should get it done! :o)

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Copyright © 2004, 2013 by Michelle Jones. All rights reserved.

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