Thursday, June 21, 2012

The Free Credit Report Sales Pitch!

By federal law, you likely qualify for one free credit report per year through the approved government provider and there are a number of on-line companies that offer free credit reports. These offers seem very attractive at first glance because you get an on-line report without waiting for a report to be mailed to you, and you often can get several reports from the three major credit bureaus at the same time, which can save you time.

However, these on-line companies run the gamut from good to bad, so you must compare several different firms before choosing one. You will also need to read the on-line company's agreement very carefully because the fine print can hide a financial obligation.

Some reputable companies promise free credit reports but only with the purchase of a credit repair program or some other credit repair package. In some cases, you can decline the offer and still get the report but in other cases you cannot. It's your choice.

Also, some companies will offer you free credit reports that are really nothing more than a combination of reports from the three major credit bureaus. They are incomplete or edited. These are practically useless, because you will want to compare each of the three credit bureau reports and fix each credit score separately.

There are also many free credit report companies that will send you unsolicited emails trying to get you to subscribe to some service. Always read the fine print very carefully to see whether the free credit report offer has no strings attached.

If you don't qualify for a government mandated free credit report, one of the legitimate on-line companies may be your best bet for getting your credit reports. The sooner you do, the sooner you can start repairing your credit history and boost your FICO credit score.

Regardless of where you get your credit history and credit score, make sure that you get the most complete information package you can. The more detailed, the better.

When you do get your credit reports you will notice that they contain quite a bit of information about you, including:

1. Your personal and contact information.

This section includes your name and your address, as well as many of your former addresses, your Social Security Number, your employers (past and present) and your date of birth.

2. Your personal information about credit.

This lists all your loans, including the types of loans you have now and have recently had, the dates these loans were opened, the credit limit on each loan, how well you have been repaying those loans (this is important - skipped or late payments count heavily against you in your credit score), and who your lenders are are all in the file. This also includes credit cards, credit lines, and store charge cards. Everything is listed.

3. Information about you that is on the public record.

This is the one that is most surprising to many people. This section will expose bankruptcy, unpaid federal-state-local taxes, unpaid child support, liens, your history with collection agencies, foreclosures, loan defaults, civil lawsuits that you have been involved in, and other information. Much of this type of negative information will stay on your credit report for many years and will seriously affect your credit score.

4. Information about who has looked at your credit report and credit score.

Every time someone looks at your credit history it is logged as a "inquiry." Your credit report lists all inquiries in the past two years and how often you have applied for loans and credit in that period of time. Too many inquiries tends to look bad and will cause points to be deducted from your credit score.

So, when shopping for credit, never give your Social Security number to potential lenders. Only give them your credit score so they are not accessing the credit bureau and adding to the number of inquiries.

Finally, it is important that you look at all parts of your credit report and understand what you are reading so you can identify errors. Mistakes in any area of your credit report can affect your score, so be sure to check the entire report for inaccuracies and contact the credit bureaus immediately to correct them.

While you cannot hide from your credit history, you can do many things to correct it and raise your FICO credit rating.

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