YOUR CREDIT HISTORY CHECK

The U.S. Fair and Accurate Credit Transactions Act of 2003 requires each of the three nationwide consumer reporting companies to provide citizens with a free copy of their credit report every 12 months.

Those three agencies, Equifax, Experian and TransUnion, created AnnualCreditReport.com, a Web site that allows consumers to request, view and print credit reports in a matter of minutes. The site also simplifies complicated financial terms and mathematical equations.

1. Understanding credit reports and scores.
A credit report, or credit file disclosure, contains information on where you live, how you pay your bills, and whether you’ve been sued or arrested, or have filed for bankruptcy. National consumer reporting agencies sell information in your credit report to creditors, insurers, employers and other businesses.

Lenders review your report to determine whether to extend you a loan and to decide the rate of interest. Employers, with your permission, may scrutinize your report for lawsuits, criminal history or whether you have filed for bankruptcy. And insurers review information to decide their level of risk in providing you with a policy.

Credit reporting companies input information from your credit report into a mathematical equation to determine a credit score.

Scores range from 330 to 830. The higher the score, the less risk a person poses to a lending company. Scores nationwide have plummeted an average of two to three points over the past year, according to Experian. Dell Financial Services reported the average credit score is 678.

Credit scores do not come with your free annual report, but you may order the score for a fee of about $7. Information about the companies’ credit score fees may be found on their Web sites at www.equifax.com. www.experian.com or www.transunion.com.

2. Identity theft.   
Reviewing your credit report is an essential part of managing your finances, according to the Federal Trade Commission, the agency charged with ensuring consumer protection. Wrong or incomplete information stated in your credit report may impede your ability to attain a loan or secure employment.

Being familiar with your credit history also guards against identity theft. People have been known to use personal information to fraudulently open credit card accounts and subsequently ruin a person’s credit score.

3. How to get the report.
Go to AnnualCreditReport.com, and highlight your state to the left of the screen below “start here.”   The link will take you to a secure site, in which you provide your name, address, Social Security number and date of birth. After you fill out the personal information fields, the site asks a few questions about your credit history as a secondary verification safeguard. Then you click on which company you want to process your report, and within seconds, your credit report pops up on the screen.

To get the report by mail: Print out and complete the Annual Credit Report Request form found at the Federal Trade Commission’s Web site, www.ftc.gov/credit or www.AnnualCreditReport.com.
 

Mail the form to Annual Credit Report Service, P.O. Box 105281 Atlanta, GA 30348-5281. According to the FTC, you should receive a report within 15 days.

Or call (877) 322-8228. Expect a report within 15 days of your request. Correct errors.

4. How to improve your credit score   
Pay your bills on time
Pay off debt instead of moving it to different accounts.
Apply for credit sparingly
Keep balances low on credit cards and other “revolving credit.”

According to the FTC, consumer reporting agencies may report negative information, like late payments,

5. How long a bad credit history sticks around
Matters of public record and filling out excessive credit card applications, for seven years.   They may report bankruptcy information for 10 years. Lawsuits or an unpaid judgment against you may be reported for seven years or until the statute of limitations runs out. Unpaid tax liens remain for 15 years, and inquiries remain on your report for two years.
  
There is no limit on reporting criminal convictions, information about one’s application for a job that pays more than $75,000 per year or information reported because a consumer applied for more than $150,000 worth of credit or life insurance.

If you find inaccurate or incomplete statements on your report, write to the consumer reporting agency and

6. Incorrect or incomplete information explain which information on your report you believe to be false. The nationwide companies must investigate the information in question, usually within 30 days, and forward the complaint to the company that reported it.

The U.S. Fair Credit and Reporting Act stipulates the consumer reporting agency and the company that reported the false information are responsible for correcting inaccurate or incomplete statements on your report.

The consumer reporting company must provide you with written results of the investigation and a free copy of your report, if the disputed results have been changed. (This report does not count as one of your free annual reports under the amended Fair and Accurate Credit Transactions Act). Contact information for the company that provided the false information must also be disclosed to the consumer.

For a more detailed explanation of your rights and dispute procedures, go to www.ftc.gov/credit.

The FTC warns consumers about companies, commonly referred to as credit clinics, that claim to repair

7. Red flags
Be aware of those who brag about credit by removing records of late payments or bankruptcies from credit reports. These blemishes cannot be removed from credit reports, and any other advice for which repair companies charge is provided free on the Internet or through consumer credit counseling services.

[Sources: AnnualCreditReport.com, the Federal Trade Commission;  Orange County Register, COX NEWS SERVICE, June 18, 2005]