Check your credit
If you are applying for a loan or credit, records of your previous dealings with
someone else's money are vital.
Whether you get that mortgage or credit card, or not, may depend
on a network of credit reporting agencies that either share information with,
or are owned by, three major credit bureaus. This report is often a critical
factor in credit scoring systems that lenders use to issue credit cards as well
as mortgages or other loans.
So, if you're considering making a major financial move it's a
good idea to check your credit report to know where you stand. That way you
can be aware of, and if necessary take care of, problems before they jump up
and derail your plans.
If you find problems, or if potential creditors discover them,
take steps to rebuild damaged credit and clean up that record.
If you've made mistakes in paying previous loans, bounced checks,
made late payments or had other problems, you may still be able to reduce the
amount of damage they will do to your credit with explanations or some basic
Getting your hands on your credit report
Obtaining copies of your credit reports is easy. Thanks
to a new
federal law everyone is entitled to one free credit report from each of
the main credit reporting agencies -- Equifax,
Experian and TransUnion -- per year. The program rolled out across the nation
region-by-region with all consumers eligible on Sept. 1, 2005.
The reports will not automatically be sent out. Each consumer
must request their reports one of these three ways. Go to www.annualcreditreport.com,
which is the only authorized source for consumers to access their annual credit
report online for free. Or, call 877-322-8228. Lastly, you may complete the
form on the back of the Annual
Credit Report Request brochure, and mail it to: Annual Credit Report Request
Service, P.O. Box 105281, Atlanta, GA, 30348-5281. One more caveat: you'll be
able to order all three credit reports at one time, or at different times throughout
the year. It's your choice. But, be sure to order from the centralized agency.
If you go directly to the credit reporting agencies, you will be charged unless
you fit another criteria for a free report.
The new ruling doesn't replace the other ways to receive a free
credit report. First, if you applied for a loan and were turned down, you can
request a copy by writing the correct credit bureau within 30 days of the rejection.
With your request, you should include a copy of the declined loan application.
Secondly, you can also get a free report if you are unemployed,
planning to apply for jobs in the next 60 days, receiving public welfare assistance
or believe the credit file contains mistakes resulting from fraud.
Lastly, if you currently reside in a state that already offers
a free annual credit report from each credit reporting agency (Colorado, Maine,
Massachusetts, Maryland, New Jersey and Vermont.) Georgia residents are entitled
to two free annual credit reports from each credit reporting agency.
To buy your credit reports, request a copy from each of the three
credit bureaus: Equifax,
Experian and TransUnion. Checking your credit can cost you as much as $9.95
per report, although it differs from state to state. You can order by phone,
at the agencies' Web sites or in writing. If
you write, your letter needs to include your full name, date of birth, current
and former address, Social Security number, your spouse's name and your phone
number. Each person requesting the report should sign the request.
Time it, then check the details
If you are about to apply for a major loan, such as a house or car, it's
important to give yourself time to correct mistakes or make good on delinquent
accounts. Depending on the type of loan, you should give your self enough time.
Here's a guideline:
- For a home, you should check your credit at least three to
six months before you apply for a mortgage.
- For an auto loan, check your credit (and arrange financing
with your bank or credit union) before you start shopping.
- For credit cards, check your report before you apply. The last
thing you need is for a credit report problem to slow down your application
-- particularly if it's not your fault.
Once you get the report, you should make sure the following information
Correct credit errors quickly. Even the smallest error could seriously dent
your credit chances. If
you find a mistake, send a separate letter to each agency where a mistake
is found. Be sure to explain the situation in detail and include a copy of the
credit report with the faulty information highlighted.
Any error that you find must be investigated by the credit bureau
with the creditor who supplied the data. The bureau will remove from your credit
report any errors a creditor admits are there. If you disagree with the findings,
you can file a short statement in your record giving your side of the story.
Future reports to creditors must include this statement or a summary of it.
The Fair Credit Billing Act requires creditors to correct errors
promptly and without damage to your credit rating. The law defines a billing
error as any charge:
-- for something you didn't buy or for a purchase made by someone
not authorized to use your account;
-- for something that is not properly identified on your bill
or is for an amount different from the actual purchase price or was entered
on a date different from the purchase date;
-- for something that you did not accept on delivery or that
was not delivered according to agreement.
Billing errors also include:
-- errors in arithmetic;
-- failure to show a payment or other credit to your account;
-- failure to mail the bill to your current address, if you told the creditor
about an address change at least 20 days before the end of the billing period;
-- questionable items, or any item for which you need more information.
Once you have written about a possible error, a creditor must
not give out information to other creditors or credit bureaus that would hurt
your credit reputation until the matter is resolved. And, until your complaint
is answered, the creditor also may not take any action to collect the disputed
The law is on your side
Keep in mind, the law is on your side if information on your credit report
is proven to be false but is not removed, according to the Fair
Credit Reporting Act. Under the law, you are entitled to actual damages,
plus punitive damages that the court may allow if the violation is proved to
have been intentional. In any successful lawsuit, you will also be awarded court
costs and attorney's fees.
You may also sue any credit-reporting agency or creditor for breaking
the rules about who may see your credit records or for not correcting errors
in your file.
A person who obtains a credit report without proper authorization
-- or an employee of a credit reporting agency who gives a credit report to
unauthorized persons -- may be fined up to $5,000 or imprisoned for one year,
But a lot of people can see that report including everyone
to whom you have applied for a loan or credit. So be careful when applying for
credit. You can even request that the credit bureaus remove
your personal information from marketing lists.
When the companies you apply to check your report they can find
out who else has been checking your report and determine what, when and how
you have been applying for credit. That means if you have been getting turned
down and are desperately applying for credit all over town your potential creditors
-- Updated: Sept. 2, 2005