How to Get Your Free Credit Report

How to Get Your Free Credit Report

In 2003, the Fair and Accurate Credit Transactions Act was signed. As it is known, FACT allows you to get your credit report from each agency at no charge on an annual basis.

In order to access your reports from each agency, the bureaus, in conjunction with the Federal Trade Commission, set up a website for consumer use. This site, AnnualCreditReport.com verifies your identity before providing you with your report.

You choose if you want to obtain all three reports or just certain reports. Each agency conducts its own verification prior to releasing the credit report, which you can download and print or save.

If you don’t want to use the internet, you can call and request your free credit report toll-free at 1-877-322-8228. You can also fill out this form and send it via mail.

It is important to note that these reports do not provide your credit score. You can request these separately through credit companies or other credit monitoring agencies.

It is also important to note that many companies offer free credit reports to lure you to their website and charge you fees for things you may not want or need. The only company that has oversight and is part of FACT is AnnualCreditReport.com.

Other Ways To Get Your Free Credit Report

In addition to the yearly free credit report that is provided through the FACT Act, there are situations where you are entitled to a free credit report. Many people don’t know this and miss out on the opportunity to verify their information.

Here are three scenarios that allow you to receive your credit report for free:

1. If you are denied credit, you will receive a notification from the company that provides details on requesting your free report. The notice will tell you which credit bureau was used to make their decision. You have 60 days to make your request to the credit bureaus.
2. If you are on government welfare or are unemployed, you can request a free credit report.
3. If you are the victim of identity theft, you can request a free copy of your reports to verify the information and pinpoint accounts and fraudulent activity.

In addition to these scenarios, your state may have different laws that allow you to request free access to your financial files.

When Buying A Credit Report Makes Sense

There are times when paying for a credit report makes sense and it’s almost always around the effort to repair your credit. Because credit repair is based on a 30-day dispute process and because getting a monthly update for any changes to your credit report is critical to that repair process, this is the time we recommend people subscribe to a monthly update service for their credit reports.

It is important to choose a service that provides all the data you need to conduct your credit repair efforts. We don’t recommend popular services such as CreditKarma.com because they omit Experian from their reports. A service such as IdentityIQ.com provides credit reports and your VantageScore from all three credit bureaus. For a few extra dollars per month, IdentityIQ will also provide your FICO score.

What Is A Credit Report?

You actually have three different credit reports, one from each of the main credit bureaus in the United States. These bureaus are Experian, Equifax, and TransUnion. Each report is a compilation of your personal data and financial information that reflects your creditworthiness.

What Information is Included in Your Credit Report?

These reports contain information about your identity, such as various names you have used in the past, current and previous addresses, and oftentimes your employment history. Your credit report also contains your credit history. This can include everything from your credit card history to school loans.

The different sections of your credit report are unpacked further on in this article.

Who Looks at Your Credit Report?

The information is a snapshot of your past and present financial accounts that agencies and businesses use, such as banks, credit card companies, and other lending institutions.

Other companies may also use your credit report to determine if you are a financial risk or an overall responsible person when it comes to managing money. Insurance companies and utility companies view your credit report for these reasons.

Potential employers may also ask you to allow them to access your credit report. Employers who do this are also gauging your level of responsibility. They can also see how many times your address has changed in the past. Too many past residences can be seen as a sign of instability.

Does Your Credit Report Change?

Your credit report is an ever-changing file. It is updated at least once a month when new information is entered by lenders, collection agencies, credit card companies, and other businesses.

Sometimes these changes are due to processes you initiated, such as applying for a credit card. Other changes are when companies report updates like late or missed payments, credit obligations being fulfilled, and other important account modifications.

Why Your Credit Report Is Important

You may be wondering why your credit report is so important. It’s simple; practically every large life purchase you make relies heavily on your credit report. If you don’t have the cash to buy a home, car, or business, lenders will check your credit report to determine if it’s a good idea for them to lend you the money you need.

It will determine if you’re approved or denied.

Checking your credit report periodically or before you apply for a loan is vital when making financial decisions. If you know your credit isn’t healthy enough to handle the loan, you can save time by waiting until you have a healthier report.

For example, let’s say you want to open a credit card.  One of the first things the credit card company will do is access your credit report. If you have a history of late or missed payments, you may be denied a credit card.

When you apply for a mortgage, your credit report will be used to determine if you are approved and determine your interest rate. If you have a good or fair credit report, your interest rate will most likely be ok, but not great. However, an excellent credit report will help you get a better interest rate.

It can harm your finances if errors are made.

Your credit report allows you to see what creditors you have accounts with are reporting to the agencies. Oftentimes, creditors report inaccurate or false information. According to a recent study done by Consumer Reports in June 2021, 34% of participants found at least one mistake listed on their credit report. We think it’s much, much higher.

It’s important to understand that errors on your report need to be corrected, and you may be the only one who knows if there are mistakes that need to be fixed. It also allows you to see if anyone is using your personal information to open accounts in your name. Identity theft can go unnoticed for a long time if you aren’t checking your reports.

Your credit report will follow you around your entire life. Understanding the importance of the data it contains is a responsibility that can affect your financial well-being.

Who Compiles the Credit Reports

As mentioned earlier, three major companies are responsible for assimilating, preserving, and providing credit reports. They are Experian, Equifax, and TransUnion. These companies each use the data in your report to compute your credit score.

Equifax was founded in 1989 in Atlanta, Georgia. It is the oldest of the three credit bureaus in the United States. It is also one of the largest credit bureaus in the world.

Experian is the largest of the three agencies. Founded in 1996 in Dublin, Ireland, it has over one billion clients around the world.

TransUnion was Formed in 1968 in Chicago, Illinois. Although it is the smallest agency out of the three, it is still one of the major players in the industry.

These bureaus are for-profit companies. Their revenues come from both consumers and businesses. Businesses that are allowed to have access to credit reports pay fees to do so.

Consumers pay for access to their personal history and score if they have already used their free annual credit report. Additionally, consumer revenue comes from credit monitoring and other services offered.

These companies have programs that collect public data from the Internet, such as court records and address changes. The collection is based on your Social Security number and name.

Businesses also submit data to the agencies for the financial side of the credit report. Banks, credit card companies, lenders, utility companies, landlords, and any other person or company that is involved in goods or services may provide data to the bureaus.

These entities may report to all three bureaus, or they may only report to one or two. This is one reason your credit score and report vary from one agency to the other.

What is on Your Credit Report

Your credit report is a wealth of information that needs to be examined for accuracy. Credit bureaus only collect your data; they do not put it into the computers and attempt not to claim responsibility for its accuracy.

Additionally, credit bureaus don’t know you personally. These agencies would not know if the data was correct or not; to them, it is merely pages and pages of information. It’s crucial to make sure everything found on your report is accurate. Otherwise, you may suffer financially due to inaccurate information that could impact your ability to borrow money.

Don’t let the amount of data on your credit report intimidate you. Your credit report may be three pages or thirty, depending on how long you have had a credit file.

Sections on Your Credit Report

The report is divided into many sections, each requiring scrutiny to make sure the information is accurate. Creditors oftentimes make mistakes when reporting information that goes on your credit report, so make sure to take your time when reviewing your credit report.

Here are the top three sections to keep in mind when reviewing your credit report.

1. Personal Information

This section contains your name, address, Social Security number, and birth date. Also included are any past addresses and any other names your Social Security is associated with, such as your maiden name or a nickname.

2. Account Information

This is the section where you will see all of your credit history and account information. All accounts associated with your Social Security number are listed here.  Before the section, you will also find a key that explains how to read the account data. This section will sometimes be separated into satisfactory and unsatisfactory segments.

Contact information for the entity will be listed along with the type of account, age of the account, payment history, original loan or credit amount, and current balance. Depending on the agency, the account may be rated – like great, good, fair, or poor.

3. Inquiries

The inquiries section provides information for all entities who have accessed your credit file in the past one to two years, depending on the type of inquiry. When a query is made because you have applied for a loan or credit in some form, it is called a hard pull. These stay on your credit for two years and affect your credit score.

Businesses that you have a relationship with, such as your credit card company, may check your credit occasionally to determine if your interest rate stays the same or changes. These are called soft pulls and do not affect your credit. These pulls stay on your credit for one year.

Each bureau has its own formatting system for these reports. You may find that inquiries are listed last, after financial accounts or that your personal data also contains credit judgments and liens. These differences are just another reason to obtain all three reports. One may have data that the other two don’t.

Takeaway

Your financial history is the heartbeat of your financial health. In order to be in tip-top shape, you need to verify the contents of your report periodically. You are allowed a free credit report from each bureau every twelve months. The information presented here will help you access and understand this important part of your finances.