Free Annual Credit Reports
|
|
In December of 2003, President Bush along with Congress approved the Fair and Accurate Credit Transactions Act. This, among other things, allows every American to order a free copy of their credit report from each of the three major credit bureaus once every twelve months. This will allow borrowers to review their credit reports for any mistakes, and to keep up-to-date with how their credit report looks to lenders. This also eliminates the need to spend anywhere from five to one hundred dollars to get a copy of your credit report from some company online.
The Fair and Accurate Credit Transaction Act went into affect in December 2004, allowing Americans living in the Western United States to begin requesting their free credit report. The next area will be the Midwestern states, which can begin requesting as of March 2005. Then, Americans in the Southern United States can begin as of June 2005 and the Eastern United States as of September 2005.
Americans will go online to AnnualCreditReport.com, and choose which of the national credit bureaus they would like their free credit report from. They are then redirected to that credit bureaus site, and fill in the request form. There were many glitches when the website first got started in December, but they are supposedly being worked out.
Understanding Your Free Credit Report
So, now that you can get your free credit report, do you understand the information on it? Well, essentially there are four sections on your credit report.
The first section gives your personal background information. This information comes from the applications you have filled out while applying for credit over the years. It will include your name, social security number, address. It may also include your previous addresses, employers, and salaries.
The second section of your report gives the details of your credit history. This shows all the accounts you have opened with lenders, and the specifics of those accounts. So, it will show when you opened the account, the amount borrowed, the monthly payments, and, most importantly, your history of payments. Any missed or late payments are the "black marks" of this section.
The third section on your free credit report will include public record information. This includes any filings for bankruptcy, any tax liens, and any other court rulings that affect your finances (such as child support).
Finally, the last section on your credit report is a list of all the lenders that have made inquiries to your report. Any time you fill out an application for credit, the lender will make an inquiry for your report to help determine whether you are a good borrower. Their name then gets added to the list, whether they end up lending to you or not.
It should be noted that if you are the one who initiates this inquiry (by filling out an application, for example) you could get up to five points taken off of your credit score. So, you want to keep this list as short as possible, and only apply for credit you know you will get.
How to Use Your Free Credit Report
Most experts agree that the best way to use this new Act is to stagger your free credit report requests. Request a free credit report from one of the three bureaus every 4 months. This will allow you to monitor your credit report throughout the year, making sure there are no errors.
Posted by jonathan on February 03, 2005 at 11:41 PM