How to Obtain a Free Credit Report in the US
FTC Advice to Consumers Seeking Clarification on Credit Scoring
Jun 5, 2009
Credit scoring is a method used by creditors in order to decide whether or not to offer a consumer credit and how much interest to charge.
Credit Reference Agencies
Information is gathered by credit reference agencies from a range of each consumer’s financial activities. For example:
- How quickly their bills are paid
- How many bills are paid late
- The amount of outstanding debt
- How many credit applications have been made over a certain period
Using this data the credit reference agencies, based on statistical information from consumers with similar profiles, will make a decision on the person’s ability to repay a loan, credit card or mortgage. Points are awarded for the positive aspects of a person’s financial history but negative aspects are also part of the equation.
Under the Free File Disclosure Rule of the Fair and Accurate Credit Transactions Act (FACT Act), US consumers have a legal right to see what’s in their credit report.
How to Obtain a Free Credit Report
Each of the credit reference companies that operate in the US, Experian, Equifax and TransUnion, are required to provide people with a free copy of their credit report once every year upon request. These reports can be accessed online or alternatively consumers can receive their copies through the mail.
The three credit reporting agencies sponsor a central site, annualcreditreport.com, the only authorized online source for free annual credit reports. It says: “Reports requested online are viewable immediately upon authentication of Identity.” It’s an excellent service for those who need to see their report quickly.
The company also provides answers to a range of frequently asked questions. For example:
- What is a credit score?
- What about companies that claim they can improve a credit report for a fee?
- What is a credit file disclosure or a credit report?
How to Improve a Credit Report
Under the Fair Credit Reporting Act (FCRA) reporting agencies are responsible for correcting any inaccurate or incomplete information on a credit report. For consumers who feel this reflects their situation they should write, by certified mail, documenting the reasons for concern. It’s important to send copies, not originals, of any relevant papers.
The credit reporting agencies must, usually within one month, investigate any alleged inaccuracies. If corrections then have to be made, all other nationwide reporting agencies must be notified.
If an investigation does not resolve the disagreement, the consumer can ask for a statement of the dispute be included in their report.
Accurate negative data that appears on a credit report can only be removed through time. Credit reference companies may hold adverse information for seven years and bankruptcy information for ten years.
Further information relating to credit reports is available from the Federal Trade Commission, AnnualCreditReport.com and from each of the three credit reporting agencies.
This information for this article, which is not exhaustive, is drawn from the sources listed below but is not offered as financial advice.
Sources:
AnnualCreditReport.com
Federal Trade Commission (FTC), Building a Better Credit Report, March 2008
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