Free Credit Reports

May 2005

I have a friend who seems to sue his credit card company just for the sport. He knows the law, and he knows when credit card companies are in violation of it.

He helped me successfully sue my credit card company after they made an error, charged me money I didn’t owe, severely damaged my credit rating, and refused to rectify the situation.

During the process I had to get a copy of my credit report — the first time I’d done so. It was fascinating, and helped me with my lawsuit.

Because of situations like this, and the increase in credit card fraud and identity theft, the government decided that everyone should now have free access to their credit reports and passed the Fair Credit and Transactions Act (FACTA). This service is being gradually introduced across the U.S. and became available to Iowans in March.

You are entitled to one free report from each of the three major credit reporting companies each year. Some experts recommend that instead of ordering all three at once, you spread it out over the year such that you receive a report every four months.

Having a credit report in hand helps you monitor your credit card activity and spot problems or fraud in the early stages. If I had been checking my credit report regularly at the time of the mistake that my credit card company made, I would have caught it sooner — before it went to a collection agency — and it may have been easier to resolve.

If you’re planning to refinance or get a major loan, you’ll likely want to get all three at once so you have available the same information that your bank has.

You can get access to your free credit reports by going to www.annualcreditreport.com. The site is sponsored by the three major credit reporting companies: Equifax, Experian, and TransUnion. You simply fill in some information such as name, address, and Social Security number, select one of the three companies, and then, if you’re lucky, you can receive your report right then and there online.

I say “if you’re lucky” because I tried two different companies and after filling in the information, I was told I needed to order it via regular mail and was given a form to send in. One of the services said something like, “Sorry, we have to ask you to do this additional step, and we can’t tell you why.” I suspect the reason is that there are many variations of the form of my street address — each credit card has a different version. And for security reasons, since the address I typed into the request didn’t match the addresses on my credit cards, they required this additional step.

FACTA doesn’t actually entitle you to a free credit report but rather to a “credit disclosure.” One main difference between the two is that the free credit disclosure doesn’t include your credit score — that all-important number that ranges between 350 and 850 and that institutions use to determine whether you’re worthy to receive credit. If you want that, you’ll have to pay $10. You can purchase your credit score when you order your free credit disclosure at AnnualCreditReport.

On the other hand, your credit disclosure makes available information to you not normally available in a credit report. According to an article on the Motley Fool financial web site, it contains all the information the credit bureau has in your file — including a record of everyone who has requested information from that particular credit bureau for various purposes.

It’s valuable to know who’s looking at your credit report because frequent requests from companies you deal with can lower your credit score, because lenders can raise your interest rate if they see something amiss in your report, and because companies such as insurance companies will sometimes raise rates based on your credit file.

Your credit disclosure also shows your credit history, which includes late payments as well as the amount you owe and the amount of credit you have available. Also included are public records (such as delinquent taxes, bankruptcies, and judgments against you). And it typically gives details on all of your current and closed credit accounts.

After you receive your credit disclosure, be sure to check it for errors. If you find something, write to the credit bureau immediately and provide documentation, if possible, to dispute the error. The bureau has 30 days to investigate your complaint.

And if they don’t comply, sue ‘em.


For more information on FACTA and other very helpful information on credit, see www.ftc.gov/credit/. To order your report by phone, call toll free 877-322-822.


© 2005 by Jim Karpen, Ph.D

E-mail Jim Karpen