Q: With all the data breaches happening lately at Target and Neiman Marcus, I want to check my credit report to make sure my information is correct. But with so many ads about credit reports and scores, how do I go about choosing a company to use? And I'm finding most want me to pay for access, but I thought I can access my credit report and scores for free?
A: Whether there is a data breach or not, it's a good idea to regularly check that your credit report information is correct. The truth is your credit report and credit score have a great deal of power. They serve as key tools that measure the financial risk you pose to lenders. The higher the score, the lower the risk. Credit scores and reports are used to determine whether or not you are approved for a mortgage, loan, or even a bank account, and can positively and negatively affect the interest rates on your credit cards and other borrowing methods. Therefore, it is extremely beneficial to do what you can now to improve your credit score and resolve any errors on your report. This will prevent this information from haunting the remainder of your financial life.
Under the Fair Credit Reporting Act, consumers can receive a free copy of their credit report from each of the three nationwide reporting agencies -- Experian, Equifax and TransUnion -- every 12 months. Many television advertisements and websites claim to offer "free credit reports," "free credit scores" or "free credit monitoring." However, BBB reminds consumers that AnnualCreditReport.com is the only authorized source for free annual credit reports under federal law.
Additionally, BBB reminds consumers that a credit report is different than a credit score. A credit report is a snapshot of your credit use history which gives a lender a view of whether you pay your debts back or not. Your credit score is a number which shows lenders how much of a risk you are in paying back a debt. Credit scores are not listed on your credit report and to access them, you usually need to pay. Although, a number of credit card companies are starting to offer your credit score in your statement as a perk.
BBB offers these tips for pulling your annual credit report:
Do not access the Annual Credit Report Request Service through links from unfamiliar websites. If you get an e-mail or see a pop-up ad claiming it's from AnnualCreditReport.com or any of the three nationwide consumer reporting companies, do not reply or click on any link in the message. To help ensure the privacy and protection of your personal information, go to AnnualCreditReport.com directly to request your free annual credit report either by secure website, phone or email. AnnualCreditReport.com will not approach consumers via email, telemarketing or direct mail solicitations.
Consider pulling your reports quarterly. While you can pull all three credit reports at once, you can also consider pulling your credit reports quarterly. Pulling your reports separately allows you to better monitor your reports and keep track of any changes or new information that may appear on your credit report. If you pull all your reports at once, you won't be eligible to pull your report for another 12 months.
Pull your child's credit report. As child identity theft remains a national problem, it can be just as imperative to pull your child's report as it is to pull your own. While the credit reporting agencies do not knowingly maintain credit files on minor children, you can contact the credit reporting agencies directly and they can run the report.
Avoid companies that claim they can improve your credit for free. The Federal Trade Commission cautions consumers to be wary of companies that make claims regarding credit repair. These companies, commonly called credit clinics, don't do anything for consumers that consumers cannot do for themselves at little or no cost. Beware of any organization that offers to create a new identity and credit file for you. For more information on credit clinics and a list of warning signs visit www.ftc.gov.
Dispute inaccuracies on your credit report. Inaccurate, derogatory information can lower your credit score and may indicate possible fraudulent activity. If you find information that you believe is inaccurate, you have the right to dispute it free of charge. Go directly through the reporting agency you pulled your report from to file your dispute.
For more information on improving your credit score and getting help with managing your credit, visit BBB's Managing Credit--Made Simpler at http://www.bbb.org/credit-management/balancing-act/index.html.
Jim Winsett is president of the Better Business Bureau of Chattanooga