There are some 600 million credit reports stored within the databases of the three national credit reporting companies (CRCs) — Equifax, Experian and TransUnion. And, thanks to federal law, each and every one of us has the right to obtain a copy of all of our credit reports once every 12 months. The question is how best to manage our credit reports to ensure their accuracy.
The reason we were given access to our credit reports was to encourage us to become more engaged with the data contained within. Legislators knew the importance of maintaining accurate credit reports. The stored data is used to determine interest rates, loan terms, insurance premiums, deposit requirements and employment eligibility. It’s in our best interest for it to be reliable, and for it to speak glowingly about our credit management skills.
There are a variety of ways to engage with our credit reports. We can choose to maintain almost constant contact, or we can choose to pull them once every twelve months and leave it at that. Of course, in the worse case scenario, we can choose to ignore our credit reports. Here’s some guidance on where to get them and what to look for when you receive them:
AnnualCreditReport.com
If you choose to take advantage of your rights under federal law to claim your reports once every 12 months, AnnualCreditReport.com is where you’ll do it. You can claim one, two or all three of your credit reports at once, or you can stagger them as you see fit. This site, formally referred to as the Central Source, is the one and only place you can claim your free credit reports online pursuant to federal law.
It’s important to note that credit scores are normally not delivered with credit reports, as they are not a permanent component of your credit file. There is no federal or state law that mandates an annual free credit score like there is for an annual free credit report. Although you may be offered a score as part of your credit report disclosure, there will likely be a fee.
Go directly to the CRCs
If accessing your credit reports once every year isn’t enough for your taste, then you can certainly pay for additional copies. Equifax.com, Experian.com and TransUnion.com have all become retail websites where you can buy a variety of credit based products and services including credit monitoring subscriptions, credit reports and credit scores.
There are also a small handful of states that allow for additional free credit reports thanks to their laws. If you choose to claim your state freebies then you’ll have to do so via the credit bureaus’ websites directly.
Credit and financial-management websites
Over the past decade a variety of companies have evolved that not only sell credit-based products and services but also give away variations for free. These sites are what’s referred to as “lead generation” sites and their business model is to attract you with high value free products in the hopes that you’ll return if you’re in the market for some sort of financial service product, such as a credit card.
CreditSesame.com, Credit.com, Quizzle.com and CreditKarma.com are all examples. All of these sites, except Quizzle, will renew your information as often as once per month. Quizzle will renew your information every six months. Some will send you reminders and some will require that you be proactive in claiming your new information.
Using these sites will give you access to variations and summaries of your credit reports from all three CRCs. You can also get access to free credit scores generated by a variety of commercially available credit scoring models, including the VantageScore model.
What should I look for?
When you access your credit reports you should review them primarily for accuracy. Although the credit reporting agencies do an admirable job maintaining accurate credit reports, errors can occur. For your benefit the Fair Credit Reporting Act provides an avenue for you to dispute information on your credit reports that you feel is incorrect. The credit reporting agencies have no more than 45 days to perform a reasonable investigation into your claims.
There’s no guarantee that your credit reports will contain each and every one of your liabilities and it’s very unlikely that the information will be identical across the three. You cannot force companies to report your information to the credit bureaus and you cannot force companies to withhold your information. You’ll be better off focusing on what you can control rather than what you cannot. The credit reporting system is entirely voluntary, which means some lenders will choose to report to less than all three of the credit bureaus thus causing the variance.
Regardless of how often you check your credit reports or which avenue you choose to do so, it’s important that you get into the habit of doing something. In order to fully leverage your rights to access your credit reports under both federal and state laws, you must be proactive in doing so. The CRCs are not required sneak up behind you and stick a credit report in your pocket. You have to ask for them, which is a good start.