Watch Your Credit Too

No matter the type of identity theft involved, some simple preventive measures can save you time and trouble, and perhaps ward off identity theft altogether. Your individual credit report is one of the most important barometers of your overall financial health. This summary of your financial responsibility prepared by credit reporting agencies tells lenders about your history of paying bills and is used by them to decide whether to loan you money and how much to charge.

What’s a Credit Report

Credit reports are created and maintained by credit bureaus or credit reporting agencies. They contain information about most of your credit related transactions. Information contained in your credit report is provided by your creditors to the credit bureaus on a regular basis. Information in your report may be used by those considering extending you credit, renting to you, hiring you for a job, or providing insurance coverage.

There are four parts to the typical credit report.

Identifying information, including your name plus any other names you have gone by, your birth date and social security number, current and previous addresses, employers and positions held.

Credit history information containing a list of your loans, credit cards and other credit accounts, including amount borrowed, balances due and a history of the timeliness of your payments. This section may also include information about collection action taken against you for late or non-payment. Credit history information may remain on your report for seven years.

Public record information listing any legal judgments against you, defaults or bankruptcies. Public record information may remain on your report for up to ten years.

Inquiries showing a list of creditors or other parties that have requested your credit report. This will include creditors to whom you have applied for credit. It may also include existing creditors wishing to monitor your credit worthiness and companies interested in making you an unsolicited credit offer.

Obtaining Your Credit Report

The official website, annualcreditreport.com, is the only authorized online source for you to get a free credit report under federal law. You can get a free credit from each of the three national credit reporting companies every 12 months. Some other sites claim to offer “free” credit reports, but may charge you for another product if you accept a “free” report.

A recent amendment to the federal Fair and Accurate Credit Transactions Act, FACT Act, 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. That means you can request one from each every 4 months. But there is only one online source authorized to do so: annualcreditreport.com. Beware of other sites that may look and sound similar.

The Federal Trade Commission (FTC), the nation’s consumer protection agency, advises consumers who order their free annual credit reports online to be sure to correctly spell annualcreditreport.com, or link to it from the FTC’s website to avoid being misdirected to other websites that offer supposedly free reports, but only with the purchase of other products. While consumers may be offered additional products or services while on the authorized website, they are not required to make a purchase to receive their free annual credit reports.

The web site www.annualcreditreport.com does not send email solicitations for your free annual credit report, or use pop up ads. It is a free service required by law to made available to consumers, but there is no financial interest in providing this service and therefore it will not be advertised to consumers. Advertised services will generally have a charge in one form or another.

The FTC has received complaints from consumers who thought they were ordering their free credit reports online. Some consumers responded to TV ads, email offers, or simply searched online.

Check Your Credit Score

Monitoring this important rating of your credit will often provide early detection of fraudulent activity, as well as provide the means to protect your accounts while you undertake further investigation. You may obtain your score, along with an explanation of the system used to calculate it from the credit bureaus on-line for a fee.

Credit bureaus and lenders calculate a credit score based on information contained in your credit report. The two main factors in determining your credit score are how you pay your debts and how much you owe. The purpose of a credit score is to help lenders determine the risk involved in extending you credit. The better your score, the more likely you will be granted credit at a reasonable interest rate. Credit scores can vary from one source to another since different scoring systems may be used. One of the most commonly used by lenders is a system developed by Fair Isaac and Company called the FICO score.

This entry was posted on Sunday, October 12th, 2008 at 11:46 am and is filed under Banking and CD Guide. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.