CH 1 – your credit report

(NOTE:  At the time that I wrote this (February 2015), Anthem Blue Cross had just suffered a loss of the personal information of up to 80 million current and former customers and employees.  Unlike with credit cards, YOU ARE RESPONSIBLE FINANCIALLY for any losses that result from this breach.  You may be able to sue Anthem if you think you can prove it was their fault, but that is potentially expensive and time consuming – measured in years.  You may also be able to ask them pretty please to pay you, but they don’t have to.

As a result, if you are one of these people, you should be paying more attention to your credit report than you might have before.

And, because this data is good for years, this is an ongoing need that you will have to satisfy for years.)

Your credit report is a summary of all of the credit accounts that you have held, both with banks and stores, active or inactive, over the last many years.  There are accounts that still show up on my credit report that have been closed for 15 years or more.

Your credit report is available from any credit reporting agency.  The agencies are the companies that banks and stores go to in order to find out if you are a good credit risk or not.  There are hundreds of credit reporting agencies in the U.S., but there are three major or national agencies – Experian, Equifax and TransUnion.

You can write to each of these agencies or go online to their web site and ask for a copy of your credit report (which is different than your credit score – more about that in a minute) and the agencies may ask for a fee (but you don’t have to pay that).  These agencies also have something called a credit score – a number between say 300 and 850 which numerically represents how good a credit risk you are.  The higher the score, the better the risk.  Fair Isaac is the grand daddy of credit scores (named after the creators Bill Fair and Earl Isaac) and their score, called a FICO score, is still used by most mortgage lenders.  There were over 10 billion FICO scores sold last year.

Under federal law, the three national credit reporting agencies are required to provide you, FOR FREE, your credit report once per year per agency.  They do not have to give you your credit score for free, but unless you are shopping for new credit, that is much less important to you.

Many states also require these same three agencies to provide you a free credit report once a year.  This is separate from and in addition to your free federal credit reports.

Here is my suggestion for how to use this free service.

Nationally, every four months, request a free credit report from one of the three national agencies (I will tell you how in a minute).  Check these reports for any credit that shows up that you don’t recognize.  Remember that credit accounts get sold and banks and stores get bought, so who you think the credit is through may not actually be who is providing the credit.

Still, if you are unsure, ask.  The three national credit agencies, by law, are required to handle disputes (each one does it a little differently) but they all require the dispute be done in writing.  The do allow you to do it online through their web sites.  They must respond to your dispute claim within 30 days, but they can ask for more time.  Still, they tend to resolve these issues quickly.

If you live in one of the states that allow you to request a free credit report under state law, every four months, in the middle of the time that you are asking for free federal reports, ask for one free state report.  It might look like this:

January – Free federal report for Experian

March – Free state report for Equifax

May – Free federal report for TransUnion

July – Free state report for Experian

September – Fee Federal report for Equifax

November – Free state report for Transunion

If you do this, you will see that the three national credit reporting agencies each have a different picture of you.  That is because companies are not required to report to all three agencies and many don’t.

However, if you file a fraud alert, the three agencies are required by law to share just that information.

This way, for free, you can see if there are any new credit accounts opened in the last two months.

Now, how do you get this.  You have three choices.

You can write each of the credit agencies a letter asking for your credit report.  You will typically have to provide them a copy of your drivers license so that they  know it is really you asking for it.

Alternatively, you can go to each agency’s web site and follow the link for a free credit report.  The web sites are:

Experian.com

Equifax.com

Transunion.com

Finally, you can go to the shared web site that the agencies have set up.  it is http://www.annualcreditreport.com

There are many look alike sites that try to sell you stuff – like FreeCreditReport .com . Those are commercial businesses trying to make a buck.  Many are not scams but some are, and you don’t have to pay to get this.

The Annual Credit Report web site will ask for your social security number and it will ask you, for each reporting agency separately, personal questions trying to convince themselves that you are you.  An example question might be “in 1990 you bought a car.  Was it a VW, Buick, Cadillac or Toyota?”.  Some of the questions are pretty strange. These questions are all public record questions, but it will stop the amateurs from masquerading as you.

There are pay sites that you make life a little easier for you, but that is a convenience factor if you want it.  There is one free site that I do recommend and that is Credit Karma (creditkarma.com).  They do have ads and do try to sell you credit offers, but the company, as far as I know, is completely honest.  I don’t make any money recommending them and I use it myself.  They also provide you a free credit score as well.

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