Type in www.annualcreditreport.com and get your free credit report!
No, really. This is a legit freebie, not one of those sleight-of-hand "freebies" that ropes you into some sort of for-pay subscription service where the opt-out feature is buried in a tangled web of point-and-click deceit. Not that that's ever happened to any of us or anything.
This spiel's for real as part of the updated Fair Credit Reporting Act passed in January that guarantees U.S. citizens a free peek into the credit files the big three reporting agencies keep on us. It's sponsored by the government of the U.S. of A., which has regulated the woo-ha out of it. Why else do you think it took a year from the date the legislation was passed to enact?
Starting tomorrow you're going to hear a whole lot about "FACTA" from your local newscasters. Don't change the channel. For those who don't keep a pen and Post-Its near the telly, here's a cheat sheet with nearly everything you need to know.
FACT-huh?: That's FACT Act, which stands for Fair and Accurate Credit Transactions Act (FACT Act), which is part of the Fair Credit Reporting Act (FCRA), which regulates how your credit information is used. Don't bother committing any of that to memory. All you really need to know is that every 12 months everyone in this great land of ours is now entitled to a free credit report from the three major credit reporting agencies -- Equifax (NYSE: EFX ) , Transunion, and Experian. The credit reports do not contain your credit score -- the three-digit credit GPA based on the FICO system developed by Fair, Isaac & Co. The Federal Trade Commission is gathering information and comments to determine a standard price the credit reporting agencies can charge consumers for their scores. The final price should be between $4 and $8. Right now, it's about $5.95.
Who cares?: Newscasters and financial writers desperate for a timely story. (Did I type that out loud?) Real answer: You should care. Why? Read on...
What's in it for me?: Three free credit disclosures! As in really free, not jump-through-a-three-ring-circus-laden-with-opt-out-loopholes free. Residents of Colorado, Georgia, Maryland, Maine, Massachusetts, New Jersey, and Vermont have been enjoying this annual costless peek for years. (Nice job, state legislators.) Anyone in any state may qualify for a free report for a number of reasons listed here, none of which you'd wish on your second-worst enemy. If you've never looked into your credit history, now you have no excuse. As you've no doubt read on these pages before, there's a good chance that what's being reported in your file isn't a 100% accurate reflection of your money-handling history.
What's in it for the credit reporting bureaus?: Besides the hope that your undying gratitude for the free glimpse into your credit file will inspire future business transactions that help drive revenue? While the credit reporting agencies (CRAs) are prohibited from marketing to you in any way, shape, or form from the annualcreditreport.com website, once you exit the site to get your free report from one of the three bureaus' sites, the sales pitches will no longer be stifled. If you show any signs of interest, you, my friend, become a "captured lead." (See also: Glengarry Glen Ross.) Remember: You are not required to purchase anything to receive your free report.
However, at least one credit reporting bureau will unveil a bona fide FACT Act-only offer to consumers who choose a free report from its website. Experian has created a new month-to-month triple-alert credit monitoring system that lets consumers know when there are any changes to their credit file from any of the three reporting agencies. (Previously, consumers had to pay for credit monitoring services from each agency to get total coverage.) In the future it will probably join Experian's regular product lineup. Expect other agencies to follow suit.
When can I get my free reports?: FACTA goes into play starting Dec. 1 in Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming. The hubbub will reach Midwesterners (Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin) starting March 1, 2005. Southern states (Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, Oklahoma, South Carolina, Tennessee, and Texas) will be next in line starting June 1, 2005; and Eastern states (Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, Vermont, Virginia, and West Virginia), the District of Columbia, Puerto Rico, and all U.S. territories will have to wait until Sept. 1, 2005.
What took so long?: You try making those in a competitive for-profit industry play nice together. The truth of it is that it takes time to set up a system whereby everyone in the country who has credit information on file can get something that used to carry a price tag for free. Approximately 100,000 entities report information to the CRAs. That includes lenders, collection agencies, credit card companies, leasing firms -- anyone who extends you credit or reports information about you. Currently 2 million credit reports are ordered each day, and 2 billion pieces of information are added to these files each month. You can probably imagine that a rush of citizens requesting their freebie could easily overwhelm the system. (Thus the rolling nationwide rollout.) The credit reporting agencies had to work together -- a first! -- to create a centralized point of contact for consumers. That required inventing an entirely new system and bulletproofing it from any form of fraud -- which when dealing with such sensitive information should probably not be rushed.
What's the difference between the "credit disclosure" I get through the FACT Act and a regular old "credit report"?: This is one of those rare instances when the freebie may actually be better than the for-pay product. You'll see the Fed-mandated freebie referred to as a "credit disclosure," "consumer disclosure," or "personal credit report." It contains all the information the credit agency has in your file, including a record of everyone who has requested information from that particular bureau for promotional purposes (e.g. "we want your business!") or review purposes (e.g. "are you still a good customer of ours?"). This list of interested parties is for your eyes only: Any credit grantor accessing your file gets a "retail" or "business" version of your report that does not include a list of such prying eyes. Here's a list of what else is included in your personal credit report.
Checking up on the checkers -- who they are and how frequently they take a peek -- is important:
- Credit inquiries can be detrimental to your score. Too many "hard inquiries" will trigger red flares at your lender's office. And it's estimated that each such inquiry can cost you five points on your overall credit score.
- Your current lender is keeping an eye out: Even the smallest gaffe can send your credit card APR through the roof. Lenders call it the "universal default clause," and it enables them to raise interest rates based not on your history with them, but based on your payment history or credit activity with other companies. And how do they know if you've been good or bad about paying your bills? That's right: They're pulling your credit file.
- It's not just lenders looking: More and more companies are finding a permissible purpose (legal speak for "yeah, you can have access to this sensitive data") to access your credit file. They include landlords, insurance companies, employers, ISPs, etc. Your credit file could reveal why your car insurance premium went up last quarter.
If you find erroneous information, you can compose your "Dear Lender" letter and get the wrongs righted.
Why do the reports look different from one another?: Each credit reporting bureau operates independently and creates its own templates, product lineups, and standards. So you'll notice that the format of your free reports -- graphics, fonts, layouts -- will vary. But the cosmetic stuff doesn't really matter (unless you seize at the sight of royal blue). What's really important is the information contained in all three of your files. Businesses that provide data to the credit reporting agencies are not required to report to all three -- or any -- of the credit bureaus. So some report to one and not the other. So if you notice that you're not getting the best rates on loans, but that the information in your Experian file looks top-notch, it may be that some piece of data being reported to another agency is counting against you.
The agencies also have some leeway with what they include in your report. Your free Transunion credit disclosure, for example, contains not only a list of the reporting businesses, but also the estimated dates that each record will expire. Expiration dates are particularly useful for those trying to improve their credit score.
Should I get all three reports at once?: When offered a plate full of freebies, it's tempting to cram as many as you can into your purse... so I've been told. But you might want to be more strategic about acquiring your free credit reports. If you do not anticipate applying for a loan of any kind in the near future, you could spread your checks over the course of a year. If you are working on fixing credit problems, the periodic freebie will show your progress. Strategically timed peeks can also work as a kind of personal ID fraud alert system (so long as any alarming entry shows up on the report you are checking at the time).
Those with a long-term outlook may want to pull all three reports at once this first year of FACTA. Then you'll have a baseline for future checks. If you are refinancing or undergoing some other major financial event, your lender will most likely check all three files, so you should, too. No matter when you decide to get the goods, it is important that you do check all three credit reports eventually since, as stated above, each may contain different information.
Give me the goods, already: All right, all right.... If you're online (and if you're reading this there's a good chance that you are), go to www.annualcreditreport.com, where you can follow the prompts to get your free reports from one, two, or all three agencies. If you're more comfortable with telephone or mail, forms to request credit reports by mail can be printed from the site. Non-plugged-in consumers can use the following contact information. Telephone and mail requests will be processed within 15 days of receipt.
Toll-free number: 877-322-8228
Annual Credit Report Request Service
P. O. Box 105281
Atlanta, GA 30348-5281
Finally, an important note. The official website -- www.annualcreditreport.com -- will not send out emails. You will not receive any phone calls, snail mail, instant messages, or fruit baskets from the official FACTA-designated entity. Carefully question any emails or other contact you get from any organization claiming to be a part of the new nationwide program. Chances are those are "freebies" worth passing up.
Dayana Yochim is counting the days until she is eligible for a free peek into her credit file. Until then you can take a looksee into her personal profile. The official Fool disclosure is not FTC-mandated.