If you've never had a copy of your credit report, now is a good time to initiate the action.
Credit reports can contain a wealth of information on where you live and how you pay your bills. They also can have details on whether you've been sued, filed for bankruptcy or even if you've been arrested.
Now that California consumers are eligible to receive free copies of their credit reports, do you have yours?
"In the past, the only way to get a free copy of your report was if you lived in a state (not California) that required free reports or if you were denied credit, housing or employment based on your credit score or because of something on your credit report," says Norma Garcia, senior attorney for Consumers Union's West Coast office in San Francisco.
But now, thanks to the Fair and Accurate Credit Transactions (FACT) Act, the nation's consumer reporting companies are required to provide consumers with a free copy of their credit reports once every 12 months.
While that's great news for consumers, there are two key factors to consider: First, you have to request the report, and second, the report doesn't include your credit score.
Nevertheless, Garcia says Consumers Union "sees this as an exciting opportunity and a tool for consumers to get power over their credit. Knowledge is power, and we're urging all consumers to take advantage of this opportunity."
Once you have your report in hand, Garcia's advice is to take a long, hard look to ensure that it's accurate and complete.
She cites a recent study by U.S. Public Interest Research Group that found one in four credit reports contains errors serious enough to cause consumers to be denied credit, a loan, an apartment or even a job.
The study also found that 54 percent of the credit reports contained personal demographic information that was misspelled, long-outdated, belonged to a stranger or was otherwise incorrect.
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How to get your report
You have several options in obtaining a free copy of your credit report.
You can get one online at www.annualcreditreport.com, or by calling toll-free
(877) 322-8228. Also, you can mail a standardized form to Annual Credit Report
Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. The standardized form is available from the Federal Trade Commission at the Web site
www.ftc.gov/credit. (Click on "New Law Promotes Access to Free Credit
Reports," then click on "Annual Credit Report Request Form.")
Do not contact the three nationwide consumer reporting companies individually.
There's no way around it. Having good credit can mean the difference between
paying a high or low interest rate on a loan or whether you can get insurance
or housing.
So use this free credit report offer to get on top of your credit and your financial health.
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"Perhaps the most important thing to check is whether someone with another name shows up on your report, or if there is activity in accounts you haven't used for years," Garcia warns.
If that happens, it's a red-flag alert for identity theft, she says, and "that's a good reason to review your credit reports on a regular basis."
One of the key decisions that consumers have to make is whether to get credit reports from all three major companies (Equifax, Experian and Trans Union) or to get just one.
"If you've recently refinanced your home and have had copies of your reports and know your credit score, you might want to just order one report from one agency," Garcia said. "That way, in four months you can get a free report from another of the credit companies and do the same in eight months."
But if you have not looked at your report in some time, you might want to get all three reports at once.
The Consumers Union executive says that your ability to obtain credit can turn on what's in the report and your credit score.
That's why she recommends paying the $6 to $9 that the credit companies charge to get your score.
"Many creditors tend to look first at your credit score and then look at the details," she says.
Donald Rehorn, spokesman for the Consumer Credit Counseling Service in the Sacramento Valley, said that "those who get both their credit reports and scores will get a full understanding of what their credit says about them as individuals."
The report is a statement that says how your character is and whether you're a good risk, he says.
He also recommends that consumers spend the money to find out their credit score.
"That will give you some indication of how you have been handling your credit. The higher the number, the better you're doing, and that means you'll get better interest rates," he says.
He says that the average for a credit score is 678 nationally. The state average is 671.
