HOW TO GET YOUR REAL CREDIT REPORT

To get on top of your credit situation, you need to know what’s in your credit report. Perusing your report is how you are going to discover mistakes that can unjustly hurt your score and is a crucial tool for detecting identity theft.

The good news is that, due to consumer pressure, Congress finally passed legislation under the Fair Credit Reporting Act that gives consumers the right to obtain three free credit reports a year. By spacing a request every four months, you can get one from each of the three credit reporting agencies during the year. The less than good news is that the credit reporting agencies have sought to make this process difficult. When you go on the internet to get your free credit report, they steer you as best they can toward information or products that must be purchased.

There are three ways to request your free credit report: online, by phone and via mail.

How to request your credit report online.

  • Visit www.annualcreditreport.com. That is the official and only site for getting your free credit report. Beware of other sites that may look and sound similar and liberally use the word “free.” They are not free; they are selling a product along with the report.Also, be careful if you’re doing a search and use phrases like “free credit report,” since that can lead to one of these commercial sites.


  • Once at annualcreditreport.com, click on your state first. Do not click on one of the three credit agency logos or you will be redirected to their site.


  • Then, fill out a simple verification of identity form that will ask for your social security number, address and date of birth.


  • Next, select which of the three nationwide credit reporting agencies you want to obtain a report from.


  • On their sites you will again be asked to verify your identity through verification questions like who is your current mortgage holder, what is a former street you lived on, etc.


  • Then, you can print out your free credit report. But remember, you can only get one free report per year from each agency.


Note, this site is not the place for you to order your credit score.Why? Because the law says they only have to give you the last FICO score that was calculated on your file.Well, that may have been a different type of inquiry and is not going to give you the most accurate score. They may also offer you Fako scores such as Vantage, Score Plus and True Credit. These are educational scores and not used by lenders when considering your credit requests. To obtain your real FICO score, visit www.myfico.com.

How to Request Your Credit Report by Phone

Call 1-877/322-8228 to request credit report. You will go through a simple verification process over the phone. The reports will then be mailed directly to you.


How to Request Your Credit Report by Mail

To request your report by mail, fill out an request form and mail it to:

Annual Credit Report Request Service PO Box 105281 Atlanta, GA 30348-5281

In order to obtain an official request form, you have to download it from the internet. (Beware, if you send a request on a non-official form, the security of your information is not guaranteed.) But if you have internet access, why waste a stamp and wait fifteen days when you can get your report immediately from www.annualcreditreport.com? It’s now an internet world.


THE TRUTH ABOUT YOUR FICO SCORE

Fair Isaac Corporation is the founder and the originator of credit scoring models that date back to the late 1950s.Their goal is to help businesses make smarter decisions when assessing risk.The FICO score – an acronym formed from the company’s name, Fair Isaac Corporation – remains the golden standard to date.The FICO score is used by 90 percent of all banks and lenders.

The FICO score is a number that summarizes your credit risk, based on a snapshot of your data at the three national credit bureaus, Experian, Equifax and TransUnion at a particular point in time.

The FICO score ranges from 300 to 850 and evaluates your payment behavior, how much you owe and your payment history. So, for a bank or a creditor who’s making a decision about extending you credit, the higher your score, the more likely you are to pay your bills on time.This will help you get approved for lower interest rates and fewer fees.The lower your score, the less likely you are to pay your obligations on time in the future. If approved for credit, you will be charged higher rates and ridiculous fees.

All three credit bureaus use the FICO scoring model developed by Fair Isaac in 1980, although they all have different names:

  • Equifax: Beacon

  • Experian: Experian/Fair Isaac Risk Model

  • TransUnion: FICO Risk Score, Classic


In general, when discussing your “credit score,” you really mean your FICO score. And when creditors request your scores from the three national credit bureaus to make a credit decision about you, they demand and receive FICO scores. However, when you purchase your credit score directly from the credit bureaus (with the exception of Equifax’s Power Score) you are without a doubt getting fako scores.This is an imitation of the FICO score, which is completely unrelated to Fair Isaac and your FICO score. Here is a breakdown of what you’re really receiving:

  • Plus Score and Credit Expert Score from Experian,

  • Trans-Risk Score from TransUnion /True Credit

  • Vantage Score from all three; Experian, Equifax & TransUnion


These generic scores are called educational scores and sold to us under the pretence that they are the actual scores that lenders and creditors use. Sadly, the three credit bureaus don’t go out of their way in their advertising campaigns to tell us the cheerless truth about the scores they provide. To obtain a free copy of your educational score from the three major credit bureaus, visit www.annualcreditreport.com. However, to get your real FICO score you can go straight to www.myfico.com! Remember, getting your own score will not hurt you, it will simply make you aware and help you better plan when applying for credit.

 

CLEAN UP YOUR FICO SCORE

It’s human nature to focus on what’s important when it’s right now and that can be true when we’re making a major financial decision like buying a house or a car, or committing to a business loan.Then of course we’re suddenly motivated to learn about credit scoring. It’s best of course to learn now and take steps to improve your score before you go into the market looking for the best deal. Improving our FICO scores is like getting in shape, it takes time and practice. So while it is never too late to begin down the path to be in great shape, it is helpful to understand that the path may take time and there’s no quick fix. In fact quick-fix efforts are costly and can backfire.

  • Pay your bills on time. Delinquent payments and collections can have a significant adverse impact on your FICO score. Therefore, make sure that you get your payments to your creditors on or before the due date on your statements.

  • Keep revolving credit balances low.The key point here is that you need to be aware that the FICO scoring model uses a sliding scale and that the LOWER a person’s utilization rate (outstanding debt to your available line of credit) on any one account the better! There is no magic number, just the lower the better.

    • Get current and stay current if you have missed payments.

    • Crisis in your credit is not going to impact you forever. Credit crises can be overcome by changing payment patterns. Scores do improve over time.The longer you pay your bills on time, the better your credit score.


  • Pay off debt rather than moving it around.


  • Contact your creditors if you are having trouble making ends meet.


  • Don't close unused credit cards as a short-term strategy to raise your score.


  • Use each of your credit cards at least once every six months.


  • Open new accounts responsibly. Don't open a number of new credit cards that you don't need just to increase your available credit.


  • Don't open many new accounts too rapidly if you have been managing credit for a short time.


Nabil Captan is a nationally recognized credit scoring expert and an illustrious educator. Nabil’s dedication to financial literacy led him to create and produce The Credit DVD Series in English & Spanish.You can contact him directly at Ncaptan@creditdvd.com or go to www.creditdvd.com for more information. Copyright 2009. Financial DVDs.All rights reserved.This material may not be published, broadcast, rewritten or redistributed without the consent of Financial DVDs Inc. Brought to you by SCORE "Counselors to America's Small Business." Ask SCORE.


© 2014 TLC Magazine Online, Inc.