It’s wise to review a copy of your credit report every year or two, even if you aren’t planning to refinance or buy a new home. This week’s column provides answers to some questions that consumers often ask about their credit record.
Q–In the past you have said people should review a copy of their credit report at least once every two years. Do I really need to check my report even though I am not planning to buy a house or refinance my mortgage soon?
A–Yes. By some estimates, more than one-third of all Americans have at least one piece of incorrect information on their credit record. Correcting errors can take several weeks or even months, so it’s better to clear the problem up now, rather than waiting until you actually apply for a new mortgage or credit account.
Q–How do I get a copy of my credit report?
A–Obtaining a copy of your credit report is easy. Just call one of the “Big Three” national credit-reporting bureaus–Trans Union Corp., Equifax or Experian (formerly TRW)– and order one. You can find their local numbers in the phone book or by calling directory assistance.
Most credit-reporting agencies handle such requests through the mail. Each report costs about $8. Your check must be accompanied by one or two pieces of identification, such as a copy of your driver’s license and a recent utility bill with your name and address on it.
Q–Can’t some people get copies of their credit report for free?
A–Federal law requires a credit bureau to give you a free report if it provided information about you to a lender or other creditor and your application was turned down. However, you must make the request within 60 days after the loan or credit card was denied.
Under a federal law that took effect Oct. 1, you also qualify for a free report if you are unemployed or are on welfare. Otherwise, you have to pay the modest fee.
Q–If I find an error on my credit report, how can I get it corrected?
A–That depends on the type of information that must be corrected. The procedure is usually explained at the bottom of the report or on the reverse side.
The first step typically involves sending the credit bureau a letter that identifies the mistake and asks for the information to be corrected. In some cases, the credit bureau will simply make the change you have requested. But usually, the bureau will contact the creditor who originally filed the information in an effort to resolve the dispute.
If the creditor insists that the information it provided to the bureau is correct, you should take the matter up directly with the creditor. Provide the creditor with canceled checks or other documentation that can prove you paid your bills in full and on time. If that’s not enough to settle the dispute, federal law allows you write a letter that presents your side of the story to the credit bureau and the bureau must then make the statement a permanent part of your credit file.
Q–I have heard that consumers who request copies of their credit report several times in a year can hurt their chances of getting a home loan or new credit card. Is this true?
A–Yes, some lenders are wary of applicants who have requested a copy of their report more than two or three times in recent months.
Virtually all credit reports include information concerning how often the credit file has been accessed–and by whom–over the past several months. If a lender notices that a loan applicant has been ordering a copy of his or her report every few weeks, it might mean that the borrower has recently had some credit problems and has been checking to see if those problems are in the file.
In a similar vein, lenders who notice that an applicant’s credit report has recently been accessed by several other credit-grantors may assume that the borrower is applying for loans or credit accounts all over town. That’s an indicator the applicant may be in bad financial shape and is in need of credit or that the borrower might soon take on more credit than he or she can afford.
Q–Shortly after I started my new job, I was shocked to find out that my employer had ordered a copy of my credit report before I was hired. Is that legal?
A–Yes. A growing number of employers are exercising that right, figuring people who manage their financial affairs responsibly tend to make better workers.
New rules that took effect last month require employers to first obtain an applicant’s written consent before ordering a report.
The fact that your future ability to get a new job could be affected by your credit history is just one more reason why it pays to keep your credit record spotless.
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Write to David Myers, P.O. Box 2960, Culver City, Calif. 90231-2960.
