Today, a co-worker casually mentioned that in preparation for a new job involving a background check, he got a copy of his credit report and discovered that there was a credit card in his name with an outstanding balance. He knows that he didn’t open this card, and is in the process of figuring out what this card is and what he has to do to fix the problem on his credit report.
Practically every time you turn on the television, you see an add for a company offering to provide a “free” credit report. But if you try to sign up for this free credit report, you quickly find that it might be a free report, but by requesting the report, you are signing up for a service, and if you don’t cancel, you will be billed for that service.
You can, however, get a free credit report without having to worry about being billed. Under Federal law and the laws of a number of states, U.S. citizens are allowed to request their credit reports once a year for free. You can do this at AnnualCreditReport.com. Through this site, every 12 months, you can request a free credit file disclosure (also known as a credit report) from TransUnion, Experian, and Equifax. Because you can get one report every 12 months from three different providers, that means that you can choose to space them out throughout the year or can order all three at once and compare.
If you are not comfortable ordering online, you can do so by phone or by mail.
I have used this service and was very satisfied. At the end of February, I will be eligible to again request free copies of my credit report and plan to do so.
One thing to note is that this will not provide you with your FICO score. You will be able to review your credit report for any fraudulent activity (and be able to see what sorts of negative activities are reflected that will affect your credit score). It is not necessary to know your credit score, but it can be useful information.
Last summer, I decided I should know my FICO score, so I purchased a report through myFICO.com. I chose the FICO Standard report, which cost me $15.95. With this, I got a copy of my credit report (which I could have gotten free) as well as a copy of my FICO score and an explanation of why my score was as it was. This option also provides you with a FICO Score Simulator, which tells you how your score can change if you do a number of different things.
The site recommends that you check your scores from all three of the reporting companies, but the purpose of this is mainly to check for fraudulent activity – which you can do for free! However, your FICO score can vary, and if you are that eager to know your exact score, then it might be worth it to you to purchase all three reports. Personally, I’m comfortable with not knowing my exact scores, but knowing that my credit report is as good as it can be right now.
If you have never checked your credit report, what’s stopping you? It’s free and there are no risks, no hidden sign-ups. You just need to know where to go. And now you do.
Megan is a 30-something government employee in the Washington, DC area. She got interested in Personal Finance when she got out of college and realized that her paycheck wasn’t going to go as far as she had hoped. Since starting this blog, she has managed to buy a house and make a solid start on her retirement goals, and hopes to help others do the same. Here is her story:
In 2007, I was a gainfully employed 20-something with no debt but not a lot of knowledge about personal finance. It was a co-worker’s comment about Roth IRAs that sent me to the internet, searching for information. It was then that I realized that I really didn’t know a whole lot about personal finance and that my current financial situation was due a lot to inherent frugal tendencies, generous family members, a fear of debt, and good luck. While that was working for me, clearly I needed a better plan.
While I had no debt, I was also pretty much living paycheck to paycheck and not worrying about going over budget (I say this as if I had a real budget) because I had an emergency fund set aside to cover any overages.
Except that’s not what an emergency fund is for.
So I did a lot of research, read a lot of blogs, and decided that I needed a plan. I needed to budget. I needed to know what I was spending my money on. I needed to prepare for the future.
I decided to create a blog not only to make myself accountable to others but also to share the knowledge that I gained along the way. I’ve learned so much from my fellow bloggers, and I hope that my readers can find something useful in what I have to share as well.