CREDIT BASICS COURSE

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Lesson Two: Your Credit Report

CHAPTER ONE: Pulling Your Free Credit Report

Let’s start off with four simple steps to pulling your free, no-strings-attached credit report every twelve months from the three major consumer reporting agencies:

  1. Go online to AnnualCreditReport.com.

  2. Enter your personal information including your name, date of birth, social security number and your current address.

  3. Answer three to four identity confirmation questions related to information on your credit history.

  4. Review your report online, download it, print it, or do all three.

You may access all three credit reports at once, one at a time or two now and one later. It is up to you.

If you prefer to request your report by mail, you may send your request to:

Annual Credit Report Request Service

PO Box 105281

Atlanta, Georgia

30348-5281

In some cases, you may be required to request your report by mail if the consumer reporting agency feels it needs additional security measures.

If you would like to order your report by phone, call toll-free 877-322-8228.

But just who are these consumer reporting agencies, and why do they get to collect our personal information? Stay tuned.

 

Chapter Two: Who Are the Credit Bureaus (Consumer Reporting Agencies)?

A common question in many of our credit workshops involves concerns about who the consumer reporting agencies are and why they are allowed to essentially traffic in our personal information.

The three major, nationwide consumer reporting agencies, also known as credit bureaus, are Equifax, Experian and TransUnion. These are NOT government agencies. They are for profit businesses that gather and distribute our credit-related information. Not only do they have the right to use our information in their business, but we are the ones who have given them permission to do so.

Any time you apply for a credit card, store card, loan, line of credit, utility account, or cell phone plan, there will usually be a request for you to give the creditor permission to check your credit history. If you were to read the fine print, it will say something along the lines of, “With your signature, you give us permission to request and receive your credit-related information from the consumer reporting agencies and to report credit-related information from the account for which you are applying.”

Next up, let’s answer the question, “why are there three credit bureaus, and not just one?”

 

Chapter Three: How Credit Reports Are Organized

Another question we often get is, “why are there three credit bureaus and not just one?” Being for profit companies, each of the three major consumer reporting agencies (or CRAs) believes they can create a better product than their competitors. It is the exact same reason we have as many car makers as we do.

They all make cars, but they tailor them for their target market.

There are actually many more than just three credit bureaus, but they are typically regional or specialized and not used by national lenders.

Now that you know what is on a credit report, would you like to know what specifically to look among all that information? Stick with us to learn more.

 

Chapter Four: What You Should Look For on Your Credit Report

A typical account on your credit report can easily contain 50 to 100 unique bits of information, from creditor details to a three-year history of your payments, from your current account balance to the highest account balance you have had. How are you to know which of all these data you should care about most?

Here is a step-by-step process to help you find information that will give you an idea of whether your credit is doing well, is in need of some TLC or is requiring some emergency attention.

  1. Verify that the names, addresses and phone numbers listed under the Identifying Information section belong to you. Don’t worry about misspellings or transcription errors. However, if you see the name of your ex’s new partner, your long-lost cousin, or a name that is completely erroneous, this might be a sign that you should take extra care to look at the accounts on your credit report for the possibility of identity theft or fraud. Do the same with the addresses and phone numbers listed.

  2. Go through your trade lines sections to make sure you recognize every single account listed. It can be difficult to identify accounts, especially if they are collections. However, collection accounts will list the original creditor under their details. Mark any account you do not recognize and return to it at the end to do further research or to dispute.

  3. Go through each account, one by one, looking to verify that the reported balance, account status (e.g. paid as agreed vs. charged off), and history of payments are accurate. If you see something that looks inaccurate - keeping in mind that information is only reported once a month - highlight it and return to it to either research or dispute.

  4. Look over the businesses listed under your reports’ hard inquiries section. If you see any businesses listed there that you do not recognize from having applied for a loan, line of credit or an account with them in the past two years, highlight and note the account.

  5. Return to do some extra research on the items you highlighted. If you believe they are inaccurate or in error, use the credit bureaus’ error dispute options to have them removed. If you would like details on how to dispute errors, we are happy to help. The following segment explains in just eight easy steps how to request the removal of errors and fraudulent activity from your report.

 

Chapter Five: Disputing Errors on Your Credit Report

Three out of every four credit reports contain an error of some sort. Most are simple misspellings or transcription mistakes. However, depending upon the study you read, from 5% to 25% of all credit reports contain an error so serious that it would lead to a credit application denial that otherwise would have been approved.

Disputing an error on your credit report is a simple if not perfect process.

To dispute an error, follow these steps:

  1. Go directly to the website of whichever consumer reporting agency (CRA) issued the report with the mistake on it, whether it was Equifax, Experian or TransUnion.

  2. Click on the “Error Dispute” option located on the home page.

  3. Enter the credit report or file number found on your copy in order to bring it up on the CRA’s system. You may be asked to create a free account with the CRA at this point.

  4. Find the error on your report and click the corresponding link to begin a dispute. You may also be given the option to “start a new dispute.”

  5. Choose from the drop down menu the reason for your dispute, from ownership or payment error to fraudulent account or out-of-date information.

  6. Add brief, factual clarifications in the corresponding explanation field as necessary.

  7. Repeat steps four through six to dispute additional mistakes or errors.

  8. “Check out” or “Submit” the dispute(s) and add any supporting documentation you might have.

After submitting your dispute, the CRA will forward the dispute to the creditor, who will have 30 days to respond, though most do so in less time.

If the creditor disagrees with your dispute, your next step should involve contacting them directly and sharing your documentation with them in order to correct the error.

Note that there is no advantage to sending your dispute by mail nor to submitting multiple disputes for the same error. Finally, beware of credit repair agencies offering to perform these steps for you, since they often charge more than one-third the area’s median monthly household income to do for you what you can do yourself for free.

With so many possibilities for errors, isn’t there a way to keep creditors from sending you promotional offers in the mail? Yes, there is. Learn more coming up next.

 

Chapter Six: Opting Out of Promotional Credit and Insurance Offers

If you are tired of all the credit card and insurance offers in your mailbox, you will be glad to know there is an easy way to put a halt to them in a matter of days. Here is how:

The easiest way is to access the online portal at OptOutPreScreen.com. Here, after entering your name, address, social security number and date of birth, you will have the option to opt out of promotional credit card offers for five years. If you have already opted out and really miss all that junk mail in your box, you may also opt back in at this site.

If you prefer to opt out by phone, you may call 888-567-8688. Again, you may opt out for five years, but not permanently.

If you would like to opt out permanently, you must go to OptOutPreScreen.com, select the “Opt Out Permanently” option, fill out your information on the form, then print, sign, date and mail it to:

Opt-Out Department

ATTN: Permanent Opt-Out Election Form

PO Box 530200

Atlanta Georgia 30353

Hand written requests may be delayed or even rejected.

Another protection for your credit is known as a security freeze and, since 2018, is free to place on your credit report. Find out why this is so helpful and how to do it in our next segment.

 

Chapter Seven: Freezing Your Credit Report

Since 2018, American adults have had the right to freeze and thaw their credit report at any time at no charge. When your credit report is frozen, no creditor will have access to your history in order to open a loan. This all but guarantees to eliminate fraudulently opened accounts, even if the ID thief has your social security number and personal information.

The process of freezing your credit report is simple:

  1. On the home page of each of the three consumer reporting agencies (Equifax, Experian, TransUnion), choose the “Security Freeze” link.

  2. Complete the online questionnaire that includes your name, social security number, birthday, and email address.

  3. Create a security PIN (a 5- to 10-digit number) required to freeze and thaw your credit report going forward. Keep your PIN in a secure vault, and do not share it with ANYBODY.

That’s it. Your security freeze takes effect immediately.

And don’t worry. A security freeze has no negative effect on your credit rating, and you can thaw it immediately at any time in the future.

So what are you waiting for?

Once you have frozen your own credit report, it would be natural for you to think next of minor children or protected adults for whom you are legal guardian. Is it possible to freeze their accounts? To get your answer to such a great question, stay with us.

 

Chapter Eight: Freezing Your Child’s Credit Report

Freezing the credit report of your minor child - or of a protected adult for whom you have legal guardianship - can minimize chances of heartache and financial hardship. Freezing your child’s credit report means that no identity thief can open and use an account in your child’s name. It means no bank or lender will mistakenly open accounts under your child’s social security number. It means when your child turns 21 and is ready to apply for an account in their own name, they are starting from a fresh slate and not one that is possibly muddled by mistakes and fraud, requiring a year or more to clean up.

To freeze the report of a minor or protected adult, go to the same web pages as you did for freezing your own report and fill out a form specifically for minors and protected adults. You will not be able to submit the request online but will need to mail the completed form, along with copies of identifying documents for yourself and the minor or protected adult to the CRA’s address on the form.

Coming up in the next, learn how to build or rebuild your credit, what a good credit score really means, and how to deal with information and activity negatively affecting your credit rating.