Keeping good credit starts with reports
by Eve Mitchell, Contra Costa Times
Credit reports show the good, the bad and the ugly in a financial life.
They also provide the basis for calculating a credit score, which,
among other things, is used to determine what interest rate is paid on
a loan or whether a loan is granted in the first place.
That’s why it’s so important for consumers to obtain a free credit
report once a year from each of the country’s three major credit
reporting bureaus: Equifax, Experian and TransUnion. Passage of a
federal law in 2003 made this possible.
Going over credit reports can reveal whether there are mistakes that
could lower a credit score and whether identity theft has occurred.
Sandra Chapin, program director at the San Mateo-based Consumer Federation of California, ordered her credit reports a few weeks ago.
It’s a practice that already paid off. When Chapin first requested her
credit reports in 2005, she found a mistake. It said she was 90 days
behind in making a payment on a bill that had been paid.
"There was some negative credit reporting on my report, and those were
in error," said Chapin, who contacted the credit-reporting bureau and
the creditor to get the matter cleared up.
The mistake that Chapin found on her report is not an isolated
incident. One in four credit reports contain mistakes that can cause
consumers to be denied credit, an apartment rental, a home loan or a
job, according to the most recent information available from the U.S.
Public Interest Research Group. The 2004 survey findings were based on
information collected from about 200 consumers in 30 states who had
reviewed their credit reports for accuracy.
"Everyone should have a sense of what their credit state is, and the
best way to do that is to review a copy of your credit report from the
three major credit-reporting bureaus," said Norma Garcia, senior
attorney for the West Coast office of Consumers Union in San Francisco.
"Often the information across the three bureaus is not consistent. Say
you bought a car and financed the car and paid off the loan. That’s
good. But it’s possible the payment history information only shows on
Experian and not TransUnion or Equifax," Garcia said.
Reviewing a credit report also can be used to determine victims of identity theft.
"You can make sure no one is opening up an account in your name.
Identity theft is huge right now, and it’s happening on so many
different levels," said Chapin.
A report released in November by the Federal Trade Commission found
that 8.3 million Americans adults were victims of identity theft in
2005. That includes 3.2 million who experienced misuse of their credit
card accounts and 1.8 million who found new accounts were opened or
other frauds were committed using their personal information.
Since the free credit report program launched in December 2004, more
than 52 million reports have been distributed at no cost to consumers
during a two-year period ended in December 2006, according to the
Consumer Data Industry Association.
The law that made it possible to get a free credit report also makes it
possible to get free yearly reports maintained by specialty consumer
reporting agencies that keep tabs on insurance claims, medical records
and employment history.
To order a free credit report, visit https://www.annualcreditreport.com/ or call 877-322-8228. The law provides consumers with a free credit report but not a free credit score.
Chapin noted that ordering a free credit report online can be frustrating and confusing.
"I suggest people do it the old-fashioned way and call. (The online
site) is difficult to understand, and you can easily click the wrong
key," she said.
Consumers who choose the online route should make sure they go to https://www.annualcreditreport.com/ and not some other site, said Garcia.
"That is the only portal to the truly free credit report. That is the
site the federal government required the three member credit bureaus to
establish to provide free credit reports," she said.
Other Web sites link the offer of a free credit report to trial memberships in credit-monitoring services, said Garcia.
For example, https://www.freecreditreport.com/,
which is operated by Experian, provides consumers with a free credit
report and credit score when they sign up for a 30-day trial
credit-monitoring membership. Although there is no charge for the trial
membership, consumers must cancel their membership before those 30 days
are up or they will be billed $14.95 for each month they continue using
the credit-monitoring service.
One way to create a cost-free credit monitoring service is to stagger
requests for free credit reports over the course of a year, said Kam
Coveyou, spokeswoman for the state Office of Privacy Protection.
"You can have a no-cost credit monitoring service by spreading out the
reports and ordering them from a different bureau every four months,"
she said.
There are a couple of things in credit reports that could be red flags, Coveyou said.
"In the personal data section, look for addresses where you have never
lived. For one thing, a person could be getting a credit card in your
name using your information but have (a different billing address).
They might by paying the bill for a couple months. And then they stop
paying the bill, and you get a call from the collection agency," she
said.
Make sure the name and other personal information is correct, Coveyou said.
"You want to make sure your name and any variant of it and your Social
Security number and employment are correct. If there is anything
different on there, that’s a red flag that someone should call the
credit bureau and ask, ‘Why is this on there?’" Coveyou said.
More information about ordering free credit reports can be obtained by
calling the state Office of Privacy Protection at 866-785-9663 or
visiting https://www.privacy.ca.gov/sheets/cis11.pdf.
Eve Mitchell covers personal finance. Reach her at emitchell@bayareanewsgroup.com or 925-952-2690.
HOW TO GET A FREE CREDIT REPORT:
You can order your free annual credit reports through a toll-free phone number, 877-322-8228, or by visiting https://www.annualcreditreport.com/. You can also download a form requesting a free credit report from the Web site and mail it to:
Annual Credit Report Request Service P. O. Box 105281 Atlanta, GA 30348-5281
Reports ordered by phone or through the mail will be sent within 15 days. Allow two to three weeks for delivery.
Credit scores are not free: Here are the prices:
Equifax (800-685-1111) charges $7.95
Experian (888-322-5583) charges $5.95
TransUnion (800-916-8800) charges $7.95
HOW TO REVIEW YOUR CREDIT REPORTS AND CORRECT ERRORS
To check your reports for errors or possible signs of identity theft, look especially at three areas:
1. Look in the Personal Information or Personal Data section. Look for
addresses where you’ve never lived. Make sure your name and any
variations of it, your Social Security number and your employers are
correct.
2. Look in the Accounts sections. Look for any accounts you didn’t
open. Look for balances on your legitimate accounts that are higher
than you expect.
3. Look for Inquiries or Requests for Your Credit History that you
didn’t make. There are two types of inquiries. "Regular" or "hard"
inquiries are the ones that result when you apply for credit or when an
account is transferred to a collection agency. This is the kind of
inquiry you should check as possible identity theft or error. The other
type, "promotional" or "soft" inquiries, would not be an indication of
problems. This type includes preapproved credit offers, checks for
employment purposes, account monitoring by your existing creditors and
your own requests for your report. You can view sample credit reports,
with the different sections explained, on the Web sites of the three
credit bureaus: https://www.experian.com/, https://www.transunion.com/ and https://www.equifax.com/.
If you see anything in your report that you believe is incorrect,
contact the credit bureau immediately. You can call the telephone
number on the report to speak with someone at the credit bureau. If you
find evidence of identity theft, the next steps to take include
contacting any creditors involved to close fraudulent accounts and
filing a police report.