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July 7, 2005 Make Sure Your Free Credit Report Is Really Free Since March, North Dakota consumers have been entitled to one free credit report a year from the federal government. It’s part of the Fair and Accurate Credit Transactions Act, which requires credit agencies to provide consumers with a free copy of their credit report every 12 months. It allows consumers an opportunity to look for fraudulent activity and inaccuracies. “But some consumers say they are being charged a monthly fee after the first report,” says Debra Pankow, North Dakota State University Extension Service family economics specialist. “That’s because some people may be going to the wrong Web site. Consumers need to be aware that there is only one place to get a free credit report with no strings attached. The Web site is www.annualcreditreport.com.” Other companies also provide a free credit report, but then start charging a fee after a free trial period. In some cases, the monthly fee is for credit monitoring or other frills. “Consumers need to read the fine print,” Pankow says. “Unless the credit report comes from the government, there are strings attached. People should have an idea of where their credit score comes from, what it means and how it can effect their borrowing options. For example, consumers can get better interest rates if they have a high credit score.” Your credit score is a figure, usually between 300 and 850, that reflects your credit history. It indicates whether you're a good candidate for a loan. Lenders also use your score to determine the interest rate and terms of your loan. Scores in the 300s are the worst. Even if you score in the 400s and 500s, you'll be charged a higher interest rate and will need a larger down payment than someone with a higher credit score. “An 800-plus score easily will qualify you for a loan with the best interest rate,” Pankow says. “Most people score in the 600s and 700s. If you're planning to make a large purchase on credit, check your credit score six to 12 months in advance so you can take steps to raise your score if needed.” In most cases, your credit history is divided into five major areas: payment history, amount owed, length of credit history, new credit and types of credit in use. Your payment history has the largest impact on your score (35 percent). If you pay your bills on time and don't miss payments, your score will be higher. “Consumers also should check the box for all three credit reporting agencies (Experian, Transunion and Equifax) to get a free credit report from each agency,” Pankow says. “In order to do this, consumers will need to go to the Web site three times. If there is incorrect information, consumers need to deal with the agency that is reporting that information in order to have it corrected.” ### Source:
Debra Pankow, (701) 231-8593, dpankow@ndsuext.nodak.edu |
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North Dakota State University |
