Your credit report contains a great deal of personal and financial information. It is accessible to certain companies which use the information to make some major decisions about you. The entries on your credit report can mean the difference between a high or low mortgage or car loan interest rate. They can influence how much you pay for insurance or whether an employer gives you a job offer. You can monitor this information to see how you look to those companies and correct potentially harmful errors by getting free online credit reports.
Definition
A free online credit report is a report ordered and delivered online through a website. The consumer is required to provide certain information to prove his identity before he is granted access to the report. Then he will see it appear free on his computer or via email if he is ordering it through the official government website. He will be asked to sign up for some sort of free trial membership before gaining access if he is using a commercial website.
Types
There are two main types of free online credit reports according to the Federal Trade Commission (FTC). The first type is the yearly report to which every consumer is entitled under a federal law called the Fair Credit Reporting Act (FCRA). The government created a website, Annual Credit Report, to fulfull the law's provisions. You can order a free online report from Experian, Equifax and TransUnion every 12 months from the site. Each of those three credit reporting agencies must give it to you without any obligation to sign up for free trials or purchase any products.
The second type of free credit online credit report comes with a catch, the FTC states. Commercial companies offer free reports to consumers who sign up for a trial membership in credit monitoring or some other service for a specified time period. The consumer will be charged for the service if she does not specifically cancel it before the trial period ends.
Purpose
The purpose of making free online credit reports accessible to consumers is to let them check their reports for accuracy. Bob Sullivan of MSNBC states that some studies estimate that there are errors in as many as 25 percent of credit reports. The credit reporting agencies are not required to audit reports for accuracy, but the FTC explains that they have to look into consumer disputes. Consumers can search for mistakes more easily because they are entitled to free annual reports. Disputes are also free, and the FCRA makes the agencies remove items that cannot be verified as correct once a consumer disputes them.
Time Frame
The FCRA states that each credit reporting agency must provide a free credit report every 12 months, which means that a consumer is entitled to three reports every year. They do not have to all be ordered at the same time when using the annualcreditreport.com website. The consumer can ask to receive an online report from one, two or all three bureaus. Privacy Rights Clearinghouse recommends ordering one online credit report every four months. This allows credit report monitoring for a full year at no cost.
Alternatives
Consumers are not obligated to order or receive their free credit reports online, although it is the fastest method. They may get instructions from the annualcreditreport.com site for ordering their reports over the telephone or through postal mail. Reports ordered through those methods can take up to three weeks to arrive as compared to immediate delivery online.
Warning
The FTC warns that some commercial providers use misleading ads which may make consumers believe their sites are providing the free reports mandated by the FCRA. The agency has taken action against such companies in the past. It continues to warn consumers that annualcreditreport.com is the only legitimate provider of free, government-mandated online credit reports. People who use any other site to obtain free online credit reports run the risk of incurring charges if they forget to cancel their trial membership.
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