Your financial reputation is very important when you decide to apply for loans, insurance and even a job. How you have been discharging your obligations is one way for others to determine whether or not you present some kind of risk to them when they loan you money, insure your vehicle or hire you to do a specific job. On top of that, you should know that identity theft can ruin your financial reputation, leaving you in a tough position.
In order to prevent some of the problems that can come with poor credit, or to fix problems that you know you have, you need to know what information is being used to make judgments about you. That information can be found in your credit report. Fortunately, you have a right to know what is in your credit report.
Information about your credit habits is reported to the three major credit bureaus, Experian, TransUnion and Equifax. These agencies then compile credit reports using the information reported to them. Financial services providers, service providers, insurers, employers and others can then look at your credit report to see what habits you have. If your report shows missed payments and high levels of debt, you might be denied some opportunities, or have to pay higher rates for services in order to offset the risk you represent.
You have a right to see what others see when they look at your credit report. The Fair Credit Reporting Act specifies that you are entitled to one free credit report every year from each of the credit bureaus. To take advantage of this, you must go to www.annualcreditreport.com. This is the official site for your free credit report. Do not try to get your free credit report by visiting a credit bureau web site initially. Once you get to the web site, you will be asked to follow these steps:
This isn’t the only way to get your free credit report. If you are turned down for a loan, denied insurance or if you are not hired for a job because of what is in your credit file, you are entitled to a free copy from the credit bureau that provided the information. You can also get a free copy of your credit report if you do not get the best interest rate on a loan, or if you don’t get a lower insurance premium, because of information in your credit history.
First, you will need to find out from the lender, insurer or employer which credit bureau they got the information from. You should receive a letter stating the reason that your application was denied, and the postal address of the credit bureau that provided the information. For your reference, here are the addresses of the three major credit bureaus:
You can send a letter requesting a free copy of your credit report. You should include your name and address, as well as why you are requesting the credit report. You should also include a copy of the rejection letter (not the original). You need to do this within 60 days of being denied, so make sure you send your letter immediately. Send it certified mail, with a return receipt, so that you can verify that the credit bureau actually received it. Note that being rejected does not entitle you to a free copy from every credit bureau. Only the credit bureau that was used in the decision is required to send you a free copy of your report.
As you attempt to get a free credit report, you need to be wary of efforts to entice you into get a “free” credit report via non-official channels. There are a number of web sites that promise free access to your credit report. However, you need to be on the alert. Many of these web sites come with catches.
The most common catch is that you will have to agree to sign-up for a “free trial” of a credit monitoring service. Your free trial will usually last between seven days and an entire month. You are usually required to provide your credit card information when you sign up for your free trial. That way, if the free trial ends, and you haven’t gone through the cancelation process, your credit card can be automatically charged.
Another trick to watch out for is the negative item dispute. In the fine print, you might discover that any disputes made by the monitoring service cost extra. So, each negative item disputed might cost between $5 and $15. The big catch is that the credit monitoring service might dispute any item that is negative – even if it is accurate. Naturally, since the item is accurate, nothing will change in your credit report, but your credit card will still be charged because the credit monitoring service went through with the dispute.
Anytime you visit a site purporting to offer a “free” credit report, you need to be careful. The official web site, www.annualcreditreport.com, does not require a credit card number for you to see your truly free credit report. If you remember to cancel your free trial, and if you are able to specify that no items can be disputed without your expressed permission, you might be able to get a free credit report. In many cases, though, you are better off going through official channels for your free credit report.
You are entitled to a free copy of your credit report from each of the major bureaus every year. You should take advantage of this, since it is a use-it-or-lose-it situation each year. “Unused” requests don’t roll over to another year. Check your credit report, and make sure you know what’s in it. That way, you can catch identity fraud early, correct inaccurate negative items, and see what financial areas need improvement.