Free Credit Report Law
To deal with identity theft and to keep lending fair, Fair And Accurate Credit Transaction Act (FACT Act) was passed by the Congress and signed by President George W. Bush in 2003. According to this law every person has a right to request and obtain free credit report from each of the three major credit reporting agencies (TransUnion, Equifax and Experian) once every twelve months. We’ll talk about ways of obtaining this information a bit later. First let’s find out why getting this information is important.
Loans On Good Terms
It’s crucial to know what’s in your credit report so you’ll get loans when you need them and on good terms. When you apply for any kind of loan, creditor requests data from one of the Credit Reporting Agencies (or from all 3) and for the most part, the decision whether to lend or not and on what conditions (interest rate) is based on the credit report provided by these agencies. Even something as simple as signing up with mobile phone provider can be seen as loan application since you’ll get the service first and pay only at the end of the month.
It is not uncommon for these reports to contain errors. For example, one of my credit cards had correct monthly balance numbers but credit line was reported as zero. Because of that, potential lenders could incorrectly assume that I was maxing out my credit cards and deny me credit. Such things are happen quite often. An independent study conducted by Public Interest Research Group in 2004 found that 79% of credit reports contained some kind of incorrect or missing information. While this study was disputed by the credit reporting agencies, they themselves acknowledged that 2% of credit reports have information removed because it was incorrect. Given the important role credit report plays in your personal finances, even a 2% chance is a valid cause for concern.
Why Wasn’t My Credit Application Approved?
Your credit application was denied? Want to know why? No problem, you can find out. Federal law requires businesses to provide you with a copy of the credit report that they requested when you applied for credit in case your application was denied. Specific procedures differ from business to business but it’s your right to ask and their responsibility to provide it. So it makes sense to ask for it if a denial happens. You may be surprised with what you’ll find.
While studies show that identity theft has been declining presently, it still remains a serious issue. A recent study has revealed the following facts about identity theft:
- Average loss per person because of identity theft related fraud is $1,882.00
- Emotional impact on the victim is comparable to one of a violent crime
- On average it requires 330 hours to cleanup all of the unpleasant fallout after your identity was stolen
- Only 15% of identity theft cases were stopped because of business proactively contacted the victim
- It’s not only about your credit history. Identity theft can result in criminal records, arrest warrants, etc. in your name that you will have to clean up.
Free Credit Report
All this trouble can be easily avoided if you monitor your credit report on a regular basis and pay attention to errors and signs of fraudulent activity. It is precisely for this reason US Government has passed the law that requires all 3 major credit agencies to provide one free credit report per year to any consumer free of charge. Since the same information is collected by all 3 agencies you can request fresh copy of your report every 4 months if you contact different agency each time. There are 3 ways you can obtain your free credit report:
- Visit http://annualcreditreport.com/. This website is operated by credit reporting agencies and is properly secured, so it’s safe to provide your personal information there given that your computer is free of malicious software.
- Call 1-877-322-8228 and request your free credit report via phone.
- Download and print the request form and mail it to the following address: Annual Credit Report Request Service P.O. Box 105281 Atlanta, GA 30348-5281
If you would like to check your credit report more often that that you’ll have to request it for a fee from one of the credit reporting agencies.
If you want to get your free credit report right away you can visit government owned site annualcreditreport.com. Alternatively you can use annualcreditreport.gov or freecreditreport.gov or freescreditscore.gov websites which will redirect you to http://www.ftc.gov/freereports and will give you the same information. The reports on these sites are absolutely free and provided to you by FCRA or Fair Credit Reporting Act.