Here's one benefit for the unemployed that Congress isn't
about to cut off: If you're out of work, you can get an additional free credit
report each year, according to CreditCards.com, which bills itself as an online
credit card marketplace.
Federal law requires that all U.S. consumers be granted free
access to their credit reports once every 12 months. Unemployed workers,
however, are entitled to an extra report during their job searches.
Those reports can have a serious effect on consumers'
financial lives. Because employers frequently use credit reports in their
hiring decisions, consumers who review those reports -- and take action based
on the information they contain -- can improve their chances of getting
hired.
Unfortunately, consumers often fail to exercise that right,
according to experts. "Most people who are unemployed are unaware that
they are eligible to receive a free credit report," says Olivia Almagro,
public information officer with the South Florida Workforce Investment Board in
Miami.
Why? Because while ad campaigns have informed people of
their right to one free credit report per year from each of the three credit
bureaus, little is said or done to let the jobless know of their extra right.
Benefits to the unemployed
Under the Fair Credit Reporting Act, each of the three major U.S.
credit bureaus -- Equifax, Experian and TransUnion -- must provide all
consumers with a free credit report each year. And they do -- online, through
AnnualCreditReport.com,
which they jointly sponsor. The act also enables those who are out of work to
get an additional credit report at no cost, provided those consumers plan to
look for a job within 60 days. Unemployed workers have had that right since
1996.
It's a right worth exercising.
"Unemployed consumers may want to check their credit
reports when applying for jobs because employers may ask to perform a
background check, which could include credit report information," says
Rebecca Kuehn, assistant director with the FTC's division of privacy and
identity protection.
Although some consumer advocates and lawmakers argue that
such credit checks are an unfair barrier to employment, they continue to be
permitted in most states. "It is important to know what is in your report
and, if there are errors, take steps to get them corrected," Kuehn says.
Otherwise, those damaging errors, left untreated, could potentially keep an
applicant from getting hired.
Credit reports can also encourage better budgeting. A
consumer can use that report to figure out what debts remain outstanding and whether
any accounts are in collections, says Natalie Pankow, a credit adviser with the
Jewish Vocational Service in Chicago. That can help with prioritizing
repayments. "During unemployment, when income is tight and/or uncertain,
learning to prioritize payments, reduce spending, stretch unemployment checks
and get access to other nonprofit agencies is paramount," Pankow
says.
Getting free credit reports
In spite of the benefits, requesting these reports isn't so
straightforward. Compared with the centralized website and phone number,
unemployed workers will find the process of getting a free report is
"definitely not one that's set to a standard format," the FTC's Kuehn
says.
An unemployed consumer who wants a free report must contact
the bureaus directly. The request process varies:
- Experian says the unemployed can visit its Website, call (866) 200-6020 or write a letter to the bureau certifying they are jobless. The letter should include: the consumer's full name (including middle initial and suffix such as Sr., Jr. or III), current mailing address, Social Security number, date of birth, previous addresses for the past five years and two proofs of the consumer's current mailing address, such as driver's license, utility bill, bank or insurance statement. The information should be mailed to: P.O. Box 9530, Allen, TX 75013. The bureau says once it gets that information, the consumer can expect a report within 10 business days.
- TransUnion offers a link on its Website for consumers seeking a free TransUnion credit report, including for the unemployed. They can also call (800) 888-4213 or mail a form to TransUnion LLC, P.O. Box 1000, Chester, PA 19022.
- Equifax says consumers can go online or call (800) 685-1111. Additionally, they can write to Equifax Information
Services LLC, P.O. Box 740241, Atlanta, GA 30374.
Better publicity needed
A consumer's right to a free credit report has been well
publicized, including a national advertising campaign for AnnualCreditReport.com,
but there hasn't been a similar effort targeting the jobless. In fact, a Google
search indicates the AnnualCreditReport.com website makes no mention of the
reports for the unemployed.
At the local level, certain state agencies acknowledge they
aren't doing much to inform their residents. The Illinois Department of
Employment Security, for example, doesn't say anything to unemployed workers
about requesting their free reports. "I don't think it's anything that's
been given a lot of thought to," says IDES spokesman Greg Rivara.
Meanwhile, California's Employment Development Department
says although its program doesn't provide that information, the state's
Department of Consumer Affairs does mention the free credit reports on its
website.
Florida's Agency for Workforce Innovation, which administers
the state's unemployment compensation, doesn't have a formal procedure for
letting unemployed workers know about the free reports. However, "when
unemployment compensation customers or workforce services customers have direct
interaction with agency staff, this type of information may be shared,"
says Robby Cunningham, the agency's communications director.
The FTC says it wants more unemployed consumers to be aware of the free reports. "We like to make sure consumers know what rights they do have," the FTC's Kuehn says.
