The Right Way to get your Free Credit Report

To everyone baffled by the tons of commercials with singing pirates and catchy jingles, consider this post a public service announcement regarding your credit report.

You are entitled to a one (1) free copy of your Credit Report from each credit reporting agency ANNUALLY by law (1 credit report from each credit reporting agency = 3 reports). The ONLY website authorized to do this is annualcreditreport.com. Everything else is a scam! Let's get some definitions out of the way:

  • Credit Report - A list of your entire credit history: loans, credit cards, previous addresses, payments on all loans/credit cards.
  • Credit Score - A score which sums up your entire Credit Report in terms of the companies risk on lending to you. Lower Score = Higher Risk.
  • Credit Reporting Agencies - Equifax, Experian, and TransUnion. Also called Credit Bureaus.
  • FICO Score - The most widely accepted Credit Score, provided to consumers by Equifax. This is what you want.
  • Vantage Score - An substandard calculation provided by TransUnion and Experian as an alternative to FICO.

The three Credit Reporting Agencies (Equifax, Experian, and TransUnion) each compile their OWN credit report on you, and calculate their own credit score on you. Judgments by lenders are based on the compilation of all three. You would be wise to get all three, make sure each credit reporting agency has the same information.

Start by going to annualcreditreport.com and follow the links to all three agencies to retrieve your -credit report- FOR FREE. Remember, your credit report is only a list of your history, it is DIFFERENT from your credit score, which is a calculation of your risk to the lender. The websites only offer your credit report for free, the credit score costs money to see.

Most likely you will be asked to create an account on each agency's website. For your benefit, create the same username on each, and use a password you don't use for ANYTHING else. Save your login information in your fireproof safe so you remember for next year. You can only get your credit report from each agency once every 365 days, not calendar year, I suggest you do it on your birthday each year so you don't forget.

To make things more confusing (as if they weren't already enough) Experian and TranUnion have developed their own scale for credit scores called VantageScore. Yes, even the credit bureaus you are supposed to trust pull shananigans. This score is dogshit and lenders do not care about it. The only site which will give you a FICO Score (which is what you want) is Equifax. Purchase your Credit Score from Equifax ($7.95) only, but make sure you get AND PRINT (2 copies each) all three of your credit reports.

If a business runs your credit report and charges you money, YOU HAVE THE RIGHT to receive a copy from them. If an apartment complex runs your credit (regardless of if you get in or not), you can get your full report from them (and see your FICO scores from all three! Sneaky, I know). Multiple credit checks by business within 30 days do not count against you. So don't wait months to have another business do it.

Your credit score is basically calculated on three things:

  • How often you make on-time payments. (If you missed a payment by more than 30 days in the past 3 years = bad, otherwise OK).
  • Your credit used-to-available ratio. (if you have $1000 of available credit across all cards, and you owe $900, ratio = 90%, bad. If you owe $100, ratio = 10%, good.)
  • How much balance is kept on cards each month. (If you pay just above minimum payment on each card each month = bad. If you pay off it completely each month = great.)
  • If you want a quick boost, pay off your credit cards. If you want a better boost, ask for a balance increase and DO NOT USE IT.

Do not close your cards while there are balances on them. It's better to keep the card and keep the credit line even if you never use it until it's empty. Get rid of any "store" cards (Circuit City, Sears, etc) you have and only keep 1 or 2 from major banks that do not have annual fees. As a bonus to yourself, make sure your card has reward points. It's better to keep a card you have had for longer than keep a newer card.

Almost done, go through each report you get, sit down with a highlighter and make sure it's all correct. You have the right to dispute any information on the credit reports. Bad information may hurt you. I recently had to correct where I worked on one report because it looked like I changed employers last month (a negative because they like stable people), so I got it corrected and it raised my score.

Finally, put your monthly bills on your credit card, and pay them off EACH MONTH. It keeps activity on the card AND shows that you pay it off each month (double bonus). I know it's a lot of info, so bookmark this page, print it out, send it to your friends, and read it later.

UPDATE: The only caveat to obtaining your credit report online is a security measure called a "Security Freeze". That means what they have on file for you is not the same what you just typed in as your last residence or whatever when you started filling out your information on annualcreditreport.com. Call the offending company up (search the site for a customer service number) and ask them to unfreeze your account so you can get your free credit report. Simple mistakes could be a misspelling of the street name, street name or apartment number. Don't panic.


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