The Fair and Accurate Credit Transactions Act of 2003, which amended the Fair Credit Reporting Act of 1970, entitles consumers to a free copy of their credit report once a year. Some state laws go beyond this and entitle consumers to a free copy of their credit report more frequently than once a year.
Unfortunately most people are unaware of this. So if they obtain their credit report at all, they often either pay for it, or they respond to “free” offers by for-profit companies (one in particular that advertises incessantly-and evidently successfully-on television) that turn out to have strings attached. Generally they require you to sign up for a “free” trial of their paid credit-related services, that you will then be charged for if you don’t remember to cancel in time.
But those places are easily bypassed. There are three main credit bureaus that compile reports, namely Equifax, Experian, and TransUnion. You can either contact them directly individually, or go to AnnualCreditReport.com, which is the source authorized by the Federal Trade Commission (FTC).
Once at the site, simply select your state and click on “Request Report.” This will take you to a form to fill out. You can then request to review the resulting reports-from all three credit bureaus-online, or receive them by phone or mail.
But why is it important to check your credit report each year, and why all three versions? Your credit report determines your credit score, which has a huge impact on your ability to get a mortgage, to get a credit card, to rent an apartment, even to get a job. By examining your credit report regularly, you can see what is helping and hurting your score, and you can make informed decisions of what actions you need to take to improve it.
One reason it’s a good idea to check your credit reports each year is that it is not at all uncommon for them to contain errors. Credit bureaus often receive ambiguous or incomplete information and just have to do the best they can with it. There might be damaging claims on your report, for instance, that in fact pertain to someone else with the same or a similar name as you. Or there might be negative entries still on your report that should have expired by now and been deleted. (Bankruptcies should drop off after 10 years; most other negative items should drop off after 7 years.)
And these errors may be on only one of the three reports, or multiple of them. That’s why you’ll want to check all three.
For any errors you find on one or more of your credit reports, you have the right to challenge these with the credit bureau. Inform them in writing of the error, enclosing copies (not your originals) of any relevant documentation you might have that shows the entry is inaccurate.
The law requires the credit bureau to then investigate the matter and inform you of their findings, generally within thirty days. If you do not receive satisfaction from them, you may also pursue the matter with the creditor. If the creditor agrees you don’t owe them any money, they must inform the credit bureau of this.
Obtaining your credit reports regularly is an important part of maintaining a good credit score, or repairing a weak one.