Your consumer credit report is one document that you should make it a routine to review.
This factual snapshot of your credit payment history contains every major transaction you have made, and it even serves as your voucher with businesses -- a negative report means you won't get the loan or might pay higher rates than those with a more positive report.
Your report can also be evaluated by companies considering hiring you for a job, renting you a residence and selling you insurance.
With identity-theft crimes on the rise and high credit scores needed to secure good interest rates, it's important to know what your report is telling others about your spending habits.
Cindy Tesch, the community outreach director at Consumer Credit Counseling Service of the CSRA, urges consumers to check their credit reports with each of the three reporting bureaus at least once a year.
These agencies, or "collection houses," store your financial data: Equifax, Experian and TransUnion.
Everyone is allowed one free credit report from each of the credit reporting agencies every 12 months under a law signed in 2005 by President Bush.
"He has made this a new law ... because there are millions of people who have been affected by identify theft," Ms. Tesch said.
Reach LaTina Emerson at (706) 823-3227 or latina.emerson@augustachronicle.com.
CORRECTING AN ERROR
The U.S. Public Interest Research Group said that nearly 80 percent of credit reports contain some type of error.
People with common last names, such as Jones, Smith or Williams, often have a higher rate of error.
"An error would be ... a creditor who has added something to your report and it may not be your account," said Cindy Tesch, the community outreach director at Consumer Credit Counseling Service of the CSRA.
If you find an error, you have the right to write a dispute letter to each credit reporting agency. By law, agencies have 30 days to contact the creditor, and the creditor has 30 days to respond and prove they are correct.
In the dispute letter, you should request a free, updated report from the agency to ensure the mistake has been removed. Written requests submitted through the bureaus' Web sites tend to be resolved the most quickly.
FREEZING YOUR CREDIT
As of November, 39 states -- Georgia and South Carolina not included -- have enacted "credit freeze" laws designed to prevent fraud by allowing consumers to temporarily block any new credit accounts set up under their name.
Georgia and South Carolina residents can pay $10 per agency to freeze their credit report by visiting www. financialprivacynow.org, said Jeannine Kinney, the senior policy director at Consumers Union.
If you've become a victim of identity theft, immediately alert the credit reporting agency so a fraud alert can be placed on your report. It's necessary to alert only one agency, because it will automatically alert the other two, Ms. Tesch said.
CONTACT THE BUREAUS
For all three copies of your credit report, visit www.annualcreditreport.com, or, contact each of the credit reporting agencies:
- Experian: (888) 397-3742 or www.experian.com
- Equifax: (800) 685-1111 or www.equifax.com
- TransUnion: (800) 916-8800 or www.tuc.com
CREDIT SCORES
The Federal Trade Commission recommends consumers obtain their credit reports from the free www. annualcreditreport.com Web site.
Credit scores are ratings created by the reporting bureaus to give lenders a quick snapshot of your creditworthiness based mainly on your past payment history.
Credit scores range from excellent (750 to 850), good (660 to 749), fair (620 to 659) and poor (350 to 619). Generally, the lower the score, the more likely you are to be denied credit or pay higher interest rates.
Your score might not be included on your credit report, unless you pay a fee.
"It's worth $8 to know where you stand because you can literally save thousands of dollars with a good credit score," Ms. Tesch said.
REPORT TIDBITS
- Avoid credit Web sites that want to charge a fee for membership.
- Avoid companies that claim they can "clean up" your credit report.
- Positive information, such as paying off a mortgage on time, stays on your credit report permanently
- Negative information, such as past due bills and collection activity, generally stay on the report for seven years but can be removed sooner.
- Each of the three credit reporting agencies calculate credit scores differently, but the scores are evaluated about the same.
- About one-third of your credit score is based on whether you make your payments on time.
GOOD CREDIT/BAD CREDIT
Having good credit can save you thousands of dollars on a loan:
$20,000 auto loan over a five-year period
Consumer/APR/monthly payment/total interest
Good credit history/4%/$368/$2,100
Bad credit history/9%/$415/$4,910
Difference: $2,810
$80,000 mortgage over 30-year period
Consumer/APR/monthly payment/total interest
Good credit history/4%/$382/$57,495
Bad credit history/9%/$644/$151,731
Difference: $94,236
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