The heavily advertised “free” reports you see on television and online are NOT your free annual reports the law provides for.  Prior to Congress passing these laws, the only way consumers could get copies of their credit reports was to pay for them.  So naturally when they became available for free, the credit bureaus developed ways to capture some of their lost credit report income.  Guess who actually is behind the singing pirates and freecreditreport.com??  Yep, Experian, one of the major credit bureaus.  They even offer opportunities for you to spend money when obtaining your FREE reports!

Their are only two legitimate websites to get your free, annual reports that you are entitled to by law:  www.annualcreditreport.com and www.ftc.gov.

NOTE: The Federal Trade Commission will direct consumers to annualcreditreport.com.

When you log onto the site to get your report, you will be asked to enter personal identification information, including your Social Security number.  Make sure your computer’s security systems are updated and look up at the website address line.  It should have an https://, not just http://.  The “S” means it is a secure site.  Knowing that you initiated the contact yourself and double checking for a secure site greatly reduces the likelihood of being on a phony site.

WHAT TO DO
Your free reports are FREE.  The credit bureaus will ‘offer’ lots of different items for purchase.  These include monitoring services and scores.  And these advertised items are right up front, before you can even get to your credit report.  Just say NO.  Sometimes the button says “NO THANKS”; whatever it says, click it to save yourself some money and get to your free annual report.

NOTE: The credit scores offered by the credit bureaus are usually NOT actual FICO scores, the ones that most financial companies use.  These ‘consumer education’ scores are not an apples-to-apples comparison with what your lender sees – save your money, don’t buy them.  You can get your actual FICO scores here.   They are $16 each and include a full report; contact us for discount codes.

Remember, any time you have to give credit card information for something “FREE”, it isn’t free!  With determination and a small amount of time, you can check your own credit reports at no cost. 

We recommend checking one of your three free ones every four months; this gives you regular, periodic monitoring throughout the year.  Simply mark your calendar or planner to log on and get  your credit report.    When reviewing your credit report, look for unknown accounts, unusual or incorrect balances on your existing accounts, inquiries for new credit that you don’t recognize, extra social security numbers or names that don’t belong to you.  Click here for tips on what to do when you find errors on your reports.

We offer a Credit Analysis for only $100 that includes a review of your current credit report and provides you with strategies to positively impact and build your credit scores.  Contact us today to order yours.

Thanks, David, for a great question that led to this article!

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The Fair Credit Reporting Act (FCRA) allows consumers to obtain three credit reports each year at no cost, one from each of the three major credit bureaus.  The true, FCRA mandated site is www.annualcreditreport.com.  You can see the Federal Trade Commission’s video here.
NOTE: The singing pirates and freecreditreport.com are NOT your true, no-cost credit reports from the FCRA.

When you find items that are not correct or that you don’t recognize, you can send a dispute letter to the credit bureaus. These tips can help your disputes be more effective.

1) If you find a mistake on one credit report, send the correction and dispute letter to all three bureaus.  Many companies report to all three bureaus and disputing with all three provides the opportunity for thorough corrections without having to get all three of your reports at one time.

2) Using a paper letter to requestion corrections rather than doing it online allows you to send in documents that support your dispute.  Send in copies, NOT ORIGINALS, of receipts, statements or letters showing the item is inaccurate on your credit report.

3) Send a clear copy of your driver’s license and social security card with your dispute letter.  Be sure your current address is on your license or include a copy of a recent utility bill with your name and address.  This reduces the chance that you’ll receive a Proof of Identity request from the credit bureaus which can delay the correction process.

4) Keep copies of the letters you send to the bureaus.  You want to have proof of a dated letter that was sent to them showing which items were disputed and why.

5) Mark your calendar for 45 days from the time you mail the dispute letters.  The credit bureaus have thirty (30) days by law to respond per the FCRA; when you are disputing something on a report obtained from annualcreditreport.com, the bureaus have 45 days.  Allowing the full 45 days takes into account mailing time on both ends. 

6) The credit bureau replies, which are a complete or partial version of your credit report, WILL NOT BE FORWARDED to another address.  If you move within a month or so of writing to the credit bureaus, you may want to notify them via mail or online that you have a different address.  Otherwise, you may not receive the updated information about your credit file.  OR someone else who now lives at your old address has access to your personal and financial information.

7) Check the fine print on the credit report reply you get back.  If it is not the full report, you may be able to log in to the credit bureau’s website using the report number to view and print the complete report.

8.) If you do not receive a reply back from all three bureaus within 60 days, your rights under the FCRA provide that the items must be removed from your file as they were not able to be verified .  You can send a follow up letter to the credit bureau that did not respond to request this removal.

Taking control of your credit can be a very positive move for your financial future.  When you need professional assistance in your credit building process, contact us for effective, one-on-one consulting. 

Your credit file is created when companies that you do business with report their customers’ account information to the credit bureaus.  They are “subscribers” and pay the bureaus to report each month.  Most major national companies report to all three; however, smaller companies such as collection agencies may not want to pay all three credit bureaus so they only report to one or two.  This is one reason for the differences in your credit files between the three bureaus.

There is no federal law stating that companies must report to the credit bureaus.  Because so many companies DO report, the Fair Credit Reporting Act (FCRA) spells out the length of time different types of information can stay on your report.

1) ACCOUNTS IN GOOD STANDING – 10 Years

Closed accounts that were never late or had any other derogatory information reported can stay on your credit report for up to ten years.  They help your score.

2) LATE PAYMENTS – 7 years

When a monthly payment is overdue by more than 30 days, it will usually shows up on the credit report.  These late payments of 30, 60, and 90+ days can stay on the credit file for seven years from the time they happened.

3) CHARGE OFFS – 7.5 years

When a company lists an account as a “charge off” or “loss to profit and loss” it can stay on your credit for seven years plus six months from the date of the first delinquency that led to the charge off.

4) COLLECTIONS – 7 years

The seven year reporting period starts with the original delinquency with the original creditor, NOT the “date opened” listed by the collection agency on the credit report.  The collection accounts often look newer with more recent dates; therefore it is important to know exactly what the collection item is for and when the original charge occurred.

5) JUDGMENTS – 7 years

The FCRA states that civil judgments can stay on for seven years from the filing date or until the governing statute of limitations has expired, whichever is longer.  Check information for your state here.

6) TAX LIENS – 7 years if paid

Unpaid tax liens can stay on the credit reports indefinitely.  Paid tax liens stay on for seven years from the date of payment.

7) BANKRUPTCY – 10 years

Chapter 7 and 11 bankruptcies can stay on for ten years from the date filed.

NOTE: Accounts included in the bankruptcy stay on for seven years from the date filed.  Late payments listed for those accounts will still come off at their own seven-year mark, even if the account was included in bankruptcy.

Chapter 12 and 13 bankruptcies that are completed and discharged can stay on for seven years from the date filed.   Dismissed, or unfinished, Chapter 12 or 13 cases can stay on the credit file for ten years from the date filed.

WHAT TO DO

If your credit report contains information that is past the reporting period, contact all three of the credit bureaus to get it removed and corrected.  You are well within your consumer rights to do so.  Be sure to follow up, making certain that your report is accurate and that no expired items remain.

Learning about your credit and being proactive in building a positive credit rating is an important step to healthy Financial Fitness for your future.   Contact us today for your in-depth Credit Analysis to be sure your credit report is as accurate as possible.

The consumer credit scores that are heavily advertised, particularly by the credit bureaus, are not necessarily FICO scores.  This means that someone who does their homework, checks their credit before going to apply for a loan and thinks they have a 700 score, may be surprised to find that their lender has a much lower score to evaluate the loan with.

The reason: the consumer went in with something other than a FICO score so the comparison is not fair; it is not apples to apples, so to speak.  When the Fair and Accurate Credit Transactions Act (FACTA) was passed in 2003 as an amendment to the Fair Credit Reporting Act (FCRA), it gave consumers the right to see their credit reports at no cost. 

However, the credit bureaus maintained the right to charge for credit scores when a consumer got their credit report.  And, most likely, there were some fees for them to pay when they used the FICO formula to give the credit score to the consumers.   In 2005, the three major credit bureaus, Experian, Equifax and TransUnion, developed the Vantage Score, which was launched in March, 2006.  It was promoted as a consistent model to be used across the three credit bureaus making it easier for consumers to understand.

It also did not require the credit bureaus to pay a fee to Fair Isaacs when they generated a score for someone; perhaps a new revenue stream for these major corporations.  Which may explain why there are now so many television advertisements for credit reports and scores.  Well, it turns out that the majority of companies still use the FICO scores.  So even though many people are checking their credit and getting their scores, it doesn’t mean they are seeing the same numbers their lender is looking at.

Everyone can get their FICO scores at http://www.myfico.com/Products/Products.aspx.  The “FICO Credit Complete” is all three credit reports and scores.  And for the month of April, they are offering 25% off all products.  The discount code is   7yrsale.  This brings the price to under $36 for all three actual FICO scores.  This is recommended for anyone who is considering a major purchase in the next year such as a home or auto loan; or a mortgage refinance, so that you can check with lenders ahead of time for the current score requirements.

NOTE: Checking your own credit does NOT count against your scores.  It will show up on your credit report as a Soft Inquiry, but is not figured in the scoring formula. 

Contact us with any questions about credit scores and credit reports.