Free Credit Reports: Get Yours Today!

You may have seen the ads telling you where you can get copies of your consumer credit reports for free. Read the fine print and you will see that there is some sort of catch with these ads that will ultimately cost you money. You don?t need to pay for your reports no matter what someone else says. Let's take a look at how you can really and truly get copies of your credit reports for free.

Thanks to an amendment made to the Fair Credit Reporting Act in 2003, Congress authorized the Federal Trade Commission to mandate that copies of your credit report be made available to you for free. Previously, in order to secure your report, you would have had to pay a fee. As of September 2005, residents of all fifty states are now eligible to obtain a free copy of their credit report from Experian, Trans Union, and Equifax once per year.

So, why were the reports made available at no charge to consumers? Well, even though all three companies operate independently from the government, combined they carry so much weight in determining your credit standing ? and your very livelihood ? that a decision was made that everyone should have access to their personal reports on demand. Furthermore, since a significant number of these reports have been determined to contain errors, consumer advocates insisted that you shouldn?t have to pay to correct someone else's mistakes. Enter the Fair Credit Reporting Act as amended in 2003.

There are several ways you can order your free credit reports, but there is only one web site that will give you your reports for free: . Again, only this one site acts on behalf of Equifax, Experian, and Trans Union to give you your reports to you for free.

You can also call the following toll free number to order your free credit reports:
1-877-322-8228

If you wish, you can place your request in writing after downloading and filling out a form found online at If you choose this method, you will need to mail the form to:

Annual Credit Report Request Service

P.O. Box 105281

Atlanta, GA 30348-5281

For more information about the Fair Credit Reporting Act and the Federal Trade Commission, please visit the following site:

When ordering your reports you can also request your FICO score. Unlike your free credit report, you will pay a small fee ? typically between $5 and $7 ? to get your score. If you elect to learn your score you can use a credit card to pay for your transaction. The three national credit reporting bureaus may also attempt to sell other services to you while you are checking off the information for your free credit report. These services include alerts, but you probably won?t need them. If you select some of the other offers, you will be charged for the service, so be careful what you pick.

Read More

How Credit Works

In order to acquire and maintain access to credit, one must have a working understanding of how credit works - namely, how credit scores are established and tracked by the three major credit bureaus.

Inquiry Myths

As discussed in "The Larry Rule," people who repetitively apply for credit are viewed with suspicion by the credit agencies. However, there are some caveats to the Larry Rule. First, multiple inquiries for the same purpose - shopping for the best deal on a home loan, for example - count as just one inquiry. Secondly, it is never harmful for you to check your own credit report - only applications for credit (not mere inquiries) count against you. Third, and most importantly, inquiry data is only kept on file for six months. So in other words, the Larry Rule has a six month statute of limitations.

The exceptions to the Larry Rule outlined above are all good news for consumers. Unfortunately, not everything contained in this article is so pleasant. For example, you may believe that your permission must be given in order for someone to check your credit. Unfortunately, this is a myth, except where it applies to employers. A potential creditor, an insurance company, a landlord, or virtually anyone else can access your credit report without your permission.

Credit Repair Myths

Many people believe that paying off debts immediately improves their credit score. Unfortunately, this one of many credit repair myths. While a paid debt is marginally preferable to an unpaid liability, the truth is that missed payments and past delinquencies are still ugly marks on your credit report, and simply paying off an old debt may not improve your credit score by even one point.

The good news is that late payment and old delinquency information will disappear after seven years. But the idea that all negative information is wiped out after seven years is another credit repair myth. The truth is that Chapter 7 Bankruptcy stays on your record for 10 years, and unpaid judgments can potentially remain on your credit report forever.

Another popular myth is that the act of closing your Credit Cards is good for your credit score. This myth is perhaps the most painful, as many people who close open accounts have difficulty opening new ones in the future. The truth is that open, active, and up-to-date accounts help your credit. Unused credit capacity (i.e. available credit) is a positive factor in determining your credit score.

Credit Counseling Myths

Credit counselors and debt management services have received a bad name over the years, and much of the negative publicity has been deserved. It is, for example, a myth that you can simply pay a company to "fix your credit." Any firm that claims to perform this hands-off service should be avoided.

But there are good, reputable credit counseling and debt management services who truly do help people. And despite the myth that using such a service inevitably hurts your credit, the truth is that many of these companies are able to reduce their clients' debts and maintain or improve their credit scores at the same time. When considering a credit counselor, look for firms that have these dual goals, not companies that focus solely lowering your liabilities.

Sincerely,

James

Read More

Understanding The Credit Scores

Why does it matter?
One of the reasons that many people get a credit card is to boost their credit score. They might be looking into getting a large personal loan for a project, a car loan, or even a mortgage and with such large sums of money; a lower interest rate comes in handy. It has no limit to how much it can save someone. One simple blunder on a credit report can be the difference in getting approved or denied for a loan.
Where can I get mine?
It is possible now for an individual to obtain their credit report online for free, once a year from each of the three main credit reporting agencies of Experian, TransUnion, and Equifax. It is critical to check yours every so often for any errors. A wealth of information is stored in the credit report including your open accounts, balances, history of payment, and previous addresses. Quite a few things could be wrong on the report as well so keep a close eye on this. A company could have reported that you missed a payment when you did not or fraudulent accounts that you know nothing about could pop up. It is safer to keep a close watch on all of these factors to protect yourself.
What does this information mean and how is it used?

Banks and credit card companies alike use all of this information to determine what an interest rate will be and how much of a loan or limit can be given. The risk of you defaulting on the loan amount and whether or not you have a history of on time payments is what they are mainly looking for. The amount of open lines of credit in comparison to debt is another factor. For example, if you have 2 Credit Cards with limits of $2,000 each your overall limit is $4,000. Going further, let us say that you have $1,000 of this $4,000 used. Your credit to debt ratio is 4:1 and will be seen as a positive thing. They do not want to see an individual who is given a higher limit use it all right away and then end up not paying them. As a general rule, never use more than 30% of your approved limit on any credit card.
How is my score determined? The FICO credit score, which is used in over 90% of banks, has a formula to it.
?35% is based on payment history. If you have been late, how late, by how much, etc? Keep that in mind if you're ever contemplating a late payment

?30% is based on how much money you owe overall to all of the open accounts you have. If a lender feels like you owe too much already you will not be given any more.

?15% is based on your past credit history. Lenders want to lend to people who have shown a consistent history with repaying their debts.

?10% is based on the types of credit used. A mortgage on a report is more positive than a similar amount that is due to credit card debt.

?The remaining 10% is based on new credit and just how many credit lines have been opened for you lately. They do not want to see you going and applying everywhere.

Keep these hints and pieces of information in mind when applying for Credit Cards and other loans as well.

Read More