In a world filled with electronic commerce, increased consumer spending, floods of credit card offers, and the ever-growing credit card balances, your personal finances are more complex and more accessible to strangers than ever. Add into the mix the ugly specter of identity theft and the integrity of some of your most personal information takes on a completely new dimension. There is one place where all the bits and pieces of your purchases and credit history all come together and are used to give a picture of your financial health and responsibility—the credit report. Although it is arguably one of the most important documents in your life, it is one thing many people have never seen.

The three major nationwide credit reporting agencies, Experian, Equifax, and TransUnion, compile financial information about you that can be used by creditors, lenders, insurers, and employers to determine your credit worthiness for a loan and to determine how much you will be able to borrow. A credit report consists of six main elements: consumer information (your birthday, address, and employment information), a consumer statement, account histories, public records, inquiries, and creditor contacts.

To help consumers keep track of the accuracy of their credit information, the U.S. government established the Fair Credit Reporting Act (FCRA) and the Fair and Accurate Credit Transactions (FACT) Act. The FCRA was enacted to help promote the accuracy and privacy of the information found in the files of these credit reporting companies. The legislation requires each of the nationwide consumer reporting companies—Equifax, Experian, and TransUnion—to provide you with a free copy of your credit report, at your request, once every 12 months.  The three agencies obtain their data independently so your report from one agency could be very different from the next. For that reason The Federal Trade Commission suggests obtaining a free report from each agency annually.

To simplify the process and keep fraudulent companies from profiting from the situation, an independent, central entity called AnnualCreditReport.com was created to handle free credit report requests. As a consumer, you should be aware that this is the only official site through which you should obtain the free annual credit reports you are entitled to by law. The FTC warms against “imposter” websites that claim to offer “free credit reports,” “free credit scores,” or “free credit monitoring.” They are not part of the legally mandated free annual credit report program and somewhere along the line, a fee will probably be required.

If you do find inaccuracies in your credit report, the FCRA provides a process for disputing the incorrect item with the credit reporting agency and/or the company, person, or organization that provided the information to the credit reporting agency. According to the FTC, you must tell the consumer reporting company what information you think is inaccurate, in writing. The company must investigate the item in question, usually within thirty days, and then forward the relevant data you provided about the inaccuracy to the organization that reported the information. When the information provider receives notice of the dispute, it must investigate the matter and report the results back to the consumer reporting company. If it finds the disputed information is inaccurate, it must notify all three consumer reporting companies so they can correct and update the information in your file. When the investigation is completed, the consumer reporting agency must give you the written results and a free copy of your report if the dispute resulted in a change. This report does not count as your annual free report guaranteed to you under the Fair and Accurate Credit Transactions [FACT] Act.

The FTC advises that consumers should review their credit report to make sure the information is accurate, complete, and up-to-date prior to making a major purchase (i.e., a house or car), buying insurance, or applying for a job. An annual review of your credit report is also your best defense against identity theft. Identity theft includes any instance where someone other than yourself uses your personal information (name, social security number, credit card number, etc.) to commit fraud. Such individuals can use your personal information to obtain a credit card in your name, conduct transactions, not pay the bill and cause a delinquent account that then appears on your credit report. A poor credit report may also result in increased interest rates on any loans or credit purchases you make.

Your credit history is far too important to not monitor, so take advantage of your free annual credit reviews and make sure what your creditors are saying about you is true!

Sources:
Federal Trade Commission—
www.ftc.gov/bcp/conline/pubs/credit/freereports.htm
AnnualCreditReport.com—www.annualcreditreport.com/cra/index.jsp

Articles are provided for the general interest of our readers. Gerber Life Insurance is not responsible for any content and recommends that you consult the appropriate professional with any questions or concerns you may have concerning any financial or health related issues.