Free Credit Report
The credit information of more than 200 million Americans is in the hands of a triumvirate of powerful reporting agencies: Equifax, Experian and TransUnion. The information these giant companies collect and disseminate can affect the ability of consumers to rent an apartment, obtain financing for a car or home loan, get car insurance or even find employment. What if that information is wrong? Shouldn’t you get a free credit report?
In March 2015, these big-three credit reporting agencies reached a settlement with New York’s Attorney General to change the way they handle errors and treat medical debts on consumers’ free credit report. The Wall Street Journal calls it the “broadest industry overhaul in more than a decade.”
Most of the changes apply nationwide and go into effect over the next three years. They include: (1) allowing consumers involved in disputes to see their credit reports a second time for free to confirm that the disputed account has been addressed and (2) removing medical debts from consumers’ credit reports soon after they are paid by the insurance company versus the current system that can keep medical debts on a credit report for up to seven years.
Many people do not think about their average credit score until they find themselves trying to qualify for a mortgage, car loan or new credit card. News of this settlement is a reminder that this can be a huge mistake. Bad credit or credit report errors can take weeks or even months to straighten out.
The Fair Credit Reporting Act allows for every American to receive a free credit report each year from these three main reporting agencies.
Here are five important reasons why consumers should take advantage of this opportunity:
- Catch Identity Theft – Unfortunately, identity theft is more prevalent than ever before. However, if you catch it early, it is easier to take control of the situation and fix the problems before they spiral out of control
- Check for Balance Errors – Even large companies make mistakes. Check your credit report to ensure that your creditors are correctly reporting your balances.
- Confirm Personal Information – This is especially important if you have recently married, divorced, changed your name or moved since employers may pull your credit history as part of the hiring process.
- Understand Credit Rejections – If you are rejected for a loan or other credit opportunity, examining your credit score and history can help explain why you were rejected and how to avoid future setbacks.
- Plan for the Future – Whether you are thinking about homeownership, buying a car or getting out of debt, having a clear picture of your credit can help determine a plan of action.