January Is A Good Time To Review Your Credit Report

On your list of tasks to take on in the new year should be an annual review of your credit report. It's free and you aren't required to sign up for anything.

Several years ago Congress passed a law requiring the three credit reporting agencies - Experian, Equifax, and Trans Union - to provide a free copy of every consumer's credit report once a year.

However, consumers need to understand there is only one source for this free annual review. Consumers should go to

www.annualcreditreport.com and follow the directions. (Be sure to either type the URL in yourself or click on the link in the previous sentence.  Just typing "free credit report") into a search engine won't turn out well). 

There are some for-profit companies that say they too will provide a free credit report, but it comes with a very large string attached. Consumers are also required to enroll in a credit monitoring service that carries a monthly fee. If they cancel in time, they can avoid the fee, but it's not always easy to do.

Julie of Marlborough, Mass., said she went to one of the commercial sites, freecreditreport.com, thinking she was getting a free credit report.

"Of course without realizing it, I got charged $25," Julie told ConsumerAffairs.com. "I was able to 'eat that' thinking that perhaps I'd not paid attention and inadvertently checked the wrong box. But then today saw a charge from them for $14.95 on my bank. When I called to inquire, I was told I'd signed up for the monthly service, of which I had no idea."

Julie was clearly unaware that she was on the wrong site to get a truly free, no-strings-attached credit report.

Starting in April, the Federal Trade Commission (FTC) began requiring FreeCreditReport.com and its competitors to add disclaimers to its advertising to help consumers avoid confusion. FreeCreditReport.com's ever-present TV ads now say "enrollment in Triple Advantage required" at the end, but the disclaimer goes by very quickly and consumers like Julie could be forgiven if they missed it, or didn't understand what it means.

Disclosure

The new rule requires websites offering "free" credit reports to include a disclosure, across the top of each page that mentions free credit reports, which states:

THIS NOTICE IS REQUIRED BY LAW. Read more at FTC.GOV. You have the right to a free credit report from AnnualCreditReport.com or 877-322-8228, the ONLY authorized source under federal law.

The Web site disclosure must include a clickable button to "Take me to the authorized source" and clickable links to AnnualCreditReport.com and FTC.GOV.

Once you are at the official AnnualCreditReport.com site, select your state from a drop-down menu and click on the "Request Report" button. Download and print out your credit report from all three reporting agencies and carefully review it, making sure the listing of open credit accounts and balances matches your records. If your identity has been stolen, for example, and someone has opened credit accounts in your name, this review could be the first warning that this has occurred.

Aside from identity theft issues, make sure the information in the report is factual. Why is that important?

Information in credit reports may affect whether consumers can get a loan or a job, so it is important that consumers check their credit reports and correct any information that is inaccurate. To learn more about your rights when it comes to annual credit report reviews, check the FTC's website.