Don't Forget Your Annual Credit Check
Perhaps you're celebrating National Consumer Protection Week (NCPW) with a big slice of cake or making a special NCPW sandwich, but hopefully you're also learning about different ways to protect yourself financially. For credit cards, one of the best ways to protect yourself happens to be pretty simple--and it's free: Getting your annual credit report.
The right to a free credit report comes as somewhat recent addition to the Fair Credit Reporting Act (FCRA), a federal law from the 1970s that was designed to set standards for the data that was reported to credit bureaus and make it so consumers could access their credit reports.
According to a paper based on a workshop held by the Payment Cards Center of the Federal Reserve Bank of Philadelphia, in the 1950s and 1960s, before the FCRA, credit bureaus weren't the national entities that we know today. They were local and targeted their services to creditors, whether they were banks, finance companies or retailers. They also tended to collect only negative data about consumers--and not just if they were delinquent or defaulted on payments. These credit bureaus would also keep track of things like marriages, promotions, deaths and even arrests. The credit report would also note if there were any inquiries about the consumer's credit history.
Because there were so many local bureaus that only served their members, this information didn't get shared with non-member creditors, and it was very possible for creditors to never really get a clear picture of someone's financial situation, particularly in terms of debt.
In the 1970s, this information started to become computerized, and the industry started consolidating into the three major credit bureaus we know today: Experian, TransUnion and Equifax. 1970 also brought about the FCRA, which gave consumers many rights surrounding their credit reports, including the right to know what's in their credit history and to be able to dispute and correct inaccuracies about that information. The act also made provisions to have certain items removed from a consumer's credit history after a set period of time, such as a bankruptcy.
Consumers did have to pay to get a copy of their credit report until an amendment to the FCRA stipulated that once every 12 months, consumers could get a free report from each of the three major credit bureaus.
Getting the annual credit reports is like getting an annual physical, though instead of checking your physical fitness, you can check your credit fitness and make sure that the information about you that's housed at these credit bureaus is accurate. If it's not, it can affect a lot of areas of your life--not just whether or not you can get credit or a good interest rate, but also whether or not you can get insurance or if a landlord will accept you as a renter. Employers even check credit histories. While many companies may tout free credit reports or free credit scores, there's only one official source that will give you your report, no strings attached. Online, that site is annualcreditreport.com, which is a clearinghouse set up by the three credit bureaus to manage these requests. You can also order the reports by phone or mail. You may choose to get one or all three, but it's good to crosscheck the information, since not all creditors report to each bureau.
If going through the website, you should be able to access the reports immediately and examine them for any discrepancies. If you find something that's wrong, such as a credit card or loan that's not yours, you can ask the credit bureau to investigate it. This investigation takes about 30 days, and when it's over, you'll get the results of it in writing, along with another copy of a credit report to show the corrected information.
With data breaches becoming a common occurrence, it's important to stay up on your credit report. The FTC notes that you may want to consider spacing out your requests throughout the year, to be more up-to-date on your file. Just as with making sure you check in with your doctor regularly, you should also make a note on your calendar when it's time to get your free credit report, and NCPW is not a bad week to use as a reminder.