It’s a necessary first step to reach almost any financial goal: Review and clean up your credit history. To help you prepare to reach your goals in 2011, here’s what you should know about credit reports.
The basics: You’re entitled to three free reports a year; one from each of the privately run, for-profit credit bureaus: Equifax, Experian and TransUnion.
The 12-month period for your free report begins with your initial request, not the calendar year. So if you requested a free report in December, you won’t be entitled to another free report from the same credit bureau until the end of this year.
There are plenty of sites advertising free credit reports, but be sure to go to the government-approved www.annualcreditreport.com when you’re ready to request a free report.
The strategy: It’s a good idea to stagger your free reports so you get one every four months. This lets you monitor your profile for errors and signs of fraud throughout the year.
If you find an error in a report, the credit bureau that supplied the report is required to notify the other two credit bureaus of the mistake.
What to watch for: A credit report summarizes your payment history, but doesn’t provide a score. That’s something that has to be purchased.
You can buy your credit score from one of the three credit bureaus, or from MyFico.com for $19.95.
Don’t be tricked by ads for free credit scores either. These offers come with catches, such as signing up for a paid product or service in order to get the “free” score.
One way you may get a free score is if you apply for credit and the lender doesn’t give you the best terms available. Under a new regulation that went into effect this year, lenders have a choice in such circumstances.
They can provide a letter stating you were given less-than-favorable terms because of your credit history. The other option is to provide a free copy of the credit score that was used to make the decision.
And disclosure rules will further tighten later this year. Starting in July, lenders will automatically have to provide a free copy of the credit score used when deciding to give applicants less-than-favorable terms.
Article source: http://www.postandcourier.com/news/2011/jan/16/understand-credit-report-for-richer-2011/
Category: Identity Theft Watch