October 14, 2005

Family Finance Supplement

Checking credit report is free once a year
and a protected right

By Barbara Rowe

Credit-reporting agencies collect and report personal credit histories and debt repayment practices to their subscribers—mostly businesses and banks. There are three major credit-reporting agencies: Equifax, TransUnion and Experian.

What a credit report contains

A credit report’s purpose is to help a lender decide whether to grant you credit. The typical credit report contains four types of information.

• Identifying information—your name (including generation such as Sr., Jr., III), nicknames, current and previous addresses, Social Security number, year of birth, current and previous employers, and, if possible, your spouse’s name.

• Credit information—the credit accounts you have with banks, retailers, credit card issuers, and other lenders. For each account, your credit report will list the type of loan (revolving credit, student loan, mortgage, etc.), the date you opened the account, your credit limit or loan amount, the account balance, and your payment pattern over the past two years.

• Public record information—state and county court records related to bankruptcies, tax liens or monetary judgments (i.e., evictions) and child support obligations.

• Inquiries: the names of all creditors and potential employers who obtained a copy of your credit report for any reason; employer’s inquiries are retained for two years, but inquiries from companies that may extend credit to you are only retained for six months.

Different lenders may make different decisions based on the same information. What is different is the importance they give to specific factors—for example, how long you have lived at the same address, how old you are, how much you earn, how much you owe and how promptly you pay your debts.

Review your credit report

A federal law that took effect in late 2004 entitles consumers to one free report each year from each of the three nationwide credit-reporting agencies.

To order your free report, do not contact the companies individually. They are only providing free annual credit reports through one central website, toll-free telephone number and mailing address.

To order, go to http://www.annualcreditreport.com or call 877-322-8228, or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. You can also print the request form from http://www.ftc.gov/credit.

(Barbara Rowe is an Extension specialist with Purdue University in West Lafayette, Ind.)

Local site Links: