Understand Your Credit

Your credit report is a record of information about your credit payment history. Private companies called credit bureaus compile credit reports. There are three primary credit bureaus in the United States:

• Equifax
• Experian
• TransUnion

Each of the credit bureaus gathers information about consumers from a combination of public records, such as court documents and property tax rolls, and reports provided by businesses, such as banks, finance companies, and utility companies.

In addition, if you are denied credit based on information in a credit report, the lender must tell you which report was used, and the credit bureau must then provide you with a copy free of charge. If you disagree with information in your credit report, you have the right to challenge that information.

There are several different types of credit scores; the industry standard is the FICO score. A company called Fair Isaac developed this score. There really is no cap to the score (the higher the score, the better your credit), the score changes regularly because everything you do that is reported to the credit bureaus affects this score in the form of deductions or additions.

FACT Act Overview

In December of 2003, Congress passed the Fair and Accurate Credit Transactions Act (often referred to as the 'FACT Act', or 'FACTA'), which amended the Fair Credit Reporting Act ('FCRA'), and established new regulations. One of the provisions of the FACT Act allows consumers to request one free credit report every 12 months. Designed to help improve the accuracy of the information contained on credit reports (by allowing consumers to review and validate their own reports), the FACT Act requires nationwide consumer reporting agencies to establish a centralized source for fulfilling requests by consumers for their credit report, beginning December 1, 2004.

Timing of Free Credit Reports

Effective Wednesday, December 1st, consumers in the following states will be eligible to request their free credit report:

Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, Wyoming.

Consumers in the remaining states, with some exceptions, will become eligible for a free credit report according to the following schedule:

March 1, 2005:

Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, Wisconsin

June 1, 2005:

Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, Oklahoma, South Carolina, Tennessee, Texas

September 1, 2005:

Connecticut, Delaware, District of Columbia, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, Vermont, Virginia, West Virginia (Note: Consumers in Colorado, Georgia, Maine, Maryland, Massachusetts, New Jersey and Vermont already have state laws governing access to credit reports.)

Consumers can request their free credit report via:

The internet:      www.annualcreditreport.com

Toll-free phone:      1-877-322-8228

Mail:
Annual Credit Report Request Service
PO Box 105281
Atlanta, GA 30348-5281

Check for Accuracy!

Your credit report is an important piece of your credit history and should be reviewed in detail. It's especially important to check your credit report (which details how well you pay your loans, bills and credit card purchases) before applying for a loan or other credit, to know where you stand. Should you choose to receive yours, pay particular attention to the following:

Name.

Ensure the spelling of your name is accurate.

Address.

Ensure your current and previous addresses are accurately reflected.

Social Security Number.

Review for accuracy.

Open trade lines.

Take care to ensure any account which is open and has a balance is one which has been opened with your authorization.

Credit Inquiries.

Because these inquiries indicate to other lenders that you have applied for new credit (which could result in additional debt), lenders may view multiple recent inquiries on your credit report as a sign that you may be overextending yourself. Be sure to review this section to ensure all inquiries are valid.

Public record information.

Ensure that any public records information, such as tax liens, monetary judgments, bankruptcies, etc., if any, are accurate and reflect the most current status and activity (knowing that there sometimes can be a delay of 30 days or more until the most recent activity is reflected on such reports). Please note that the FACT Act doesn't require the nationwide consumer reporting agencies to furnish actual credit scores in conjunction with credit reports. However, you may request your credit score, for which you will be charged a nominal fee.

Be sure to use www.yourcreditcounts.com to understand how to read your credit report, manage your credit score, dispute credit report inaccuracies, and more! In particular, the following link can help answer some of your questions regarding credit reports:

Financial Basics - Credit Reports

Free access by consumers to their credit reports is but one provision of the FACT Act. For more information, you can visit the Federal Trade Commission's Web site at www.ftc.gov.