With their base located in Redwood City, California, Trusted ID began operation in 2005. They are currently funded by Draper Fisher Jurvetson and Opus Capital Ventures. They have been recognized by the non-profit organization Identity Theft Resource Center whose primary focus is the continuing research and prevention of any activity involving identity theft.

Because of this, TrustedID has been acknowledged as one of the premier companies combating identity theft. It has been featured in such publications as Newsweek, the New York Times and the Wall Street Journal. It has also been named as #1 in its class, as an identity theft resource, by Javelin Strategy and Research. Financial expert Suze Orman has also officially endorsed its services.

Features

Along with identity theft protection, there is also assistance provided should there be an occurrence of identity theft. The complete identity theft package offers a number of features that will serve to deliver comprehensive protection which consists of:

Credit Monitoring – performs a daily review of activity involving the major credit bureaus (Experian, Equifax and TransUnion). If there are any changes to the customer’s three reports, a notification is made. The customer will also receive their credit score along with a credit report from each bureau, as well.

Fraud Alert – A fraud alert may be authorized by the customer on their credit reports. This means that the customer will be notified before any new credit will be issued. The customer will also be reminded to renew the fraud alert every 90 days prior to expiration.

Identity Threat Score – a proprietary scoring system is used to indicate the perceived possibility of identity theft. This score is the product of continuous monitoring of the currently available private and public databases which number in the hundreds. This means that literally millions of financial records are researched. An analysis is then made of the patterns that may indicate the possibility of current or future identity theft. The score is then presented on a scale of zero – 500.

Eliminate Unsolicited Credit Checks – “pre-approved” credit offers will cease after the customer’s name is taken off of lists that are used by credit solicitors. This will also lead to a decrease in junk mail, in general, since the customer’s credit report can no longer be accessed by unsolicited third parties.

Identifying Potential Medical Benefits Fraud – One of the most common varieties of identity theft fraud involves the unauthorized use of medical benefits. Your current medical benefits statement will be scrutinized to determine if this type of fraud has taken place.

Website Surveillance – Periodic scans of known “black market” personal information websites are performed. These are sites where the personal information of identity theft victims are sold and purchased for criminal purposes. This information may include a victim’s name, address, credit card info, Social Security number, and banking information.

Warranty – As a member of TrustedID, you can receive coverage of up to $1 million if you are the victim of identity theft. This money can be used for expenses which include:

• Assistance for the restoration of your identity
• A maximum of $5,000 for up to four missed work weeks – days missed due to time needed for credit repair purposes
• New credit application fees
• Missed work time due to issues with employment qualifications as a result of identity theft
• Legal fees resulting from identity theft

Family Plan – A discount is given when two adults sign up at the same time.

Credit Freeze – For an additional fee, a credit freeze will be implemented with the three major credit bureaus. This saves time and effort over manually contacting the three bureaus independently.

Customer Service

The customer service department can be contacted 24/7. There is also the promise that customer service will be based in the US and will not be foreign outsourced. Service is provided by trained identity theft professionals with a “superior” service rating. Any additional products are only suggested when there is an immediate need.

Pricing

A 14-day free trial is offered. Afterwards, the cost is $125 yearly (individual) or $240 yearly (two adults on the family plan).

Extent of Credit Report Inaccuracies

There is conflicting data on the number of consumer credit reports that contain inaccuracies. The 2011 U.S. Consumer Credit Reports: Measuring Accuracy and Dispute Impacts study conducted by the Policy & Economic Research Council (PERC) finds that 3.87 percent of all credit reports examined had one or more errors that would impact a credit score.

However, the U.S. Public Interest Research Group disputes the findings of the PERC study, which was funded by the three credit reporting agencies. According to the U.S. Public Interest Research Group, other studies have shown error rates as high as 25 percent. The group says the PERC study underestimated the error rate by overestimating the number of satisfied consumers who used the dispute resolution processes of the credit reporting bureaus.

Since the federal Fair and Accurate Credit Transactions Act allows consumers free credit reports once a year, the best common practice would be to check your credit report for inaccuracies at least once a year.

Main Reasons for Credit Report Inaccuracies

The main causes of credit report inaccuracies, according to the PERC report, include:

• The account doesn’t belong to the person.
• Incorrect present/previous account status.
• Inaccurate payment history profile.
• Account closed but still shown as open.
• Identifying information is incorrect.

Credit repair, whether do-it-yourself or conducted by a credit repair company, removes inaccurate information from your credit report by disputing items through a dispute resolution process with the credit reporting agencies. It is important to note that credit repair can only be used to remove incorrect information. For example, if your credit report indicates you made a late payment and you have documentation that shows the payment was not late, then the credit repair process can fix the error.

However, credit repair is not a solution for removing accurate negative information. For example, if you have bad credit because you made late payments on a legitimate debt, then credit repair cannot remove this factual information.

Reasons for credit repair differ from person to person. If you have reason to believe that your credit report contains errors or inaccurate information, then proceeding with credit repair activities will ensure your credit score is not impacted by this negative incorrect information.

At the end of each year, the Internal Revenue Service endeavors to alert the general public regarding identity theft scams. These regularly pop up and target those who will soon be emailed their job-related tax forms in order to file for income tax (to obtain a refund or pay additional taxes). The psychology behind this has to do with financial recovery after the holidays and, face it who wouldn’t like to get a cash windfall from the government?

In times of economical hardship, the identity theft scams increase proportionally in number [1]. The starting point of these scams can normally be found in your personal (and ofttimes work email addresses). The scam starts by getting the victim’s attention with a promise of a large sum of money that is waiting for them. According to the email, all that is needed is to transfer the money from a foreign bank account to the victim’s personal checking or savings account. What could be easier – right? The large sum of cash is supposedly from a lottery winning, or an inheritance. Some of the most insidious scams are those that appear to come from the IRS, itself. This may be from some bogus new policy or unclaimed tax refund based on an obscure technicality that the victim wasn’t aware of when they filed their taxes.

Scams based on religious beliefs.

Due to the poor economy, you will also see a large number of scams that rely heavily on the criminal element masquerading as extremely religious individuals. These scammers will use the name of God and attempt to get on the good side of the victim by pretending to be followers of Christianity. They will pretend to be involved with charities and ask for help to get money to those who are less fortunate. But they can be spotted if you know the “language” of the scammer [2]. The ironic thing about these identity theft scams is that, although the scams are being reported as “new”, they are, in truth, just variations of scams that were popular way back in 1920.

Government-related scams

Scammers posing as government related officials from the FBI, the Department of Justice or the IRS are common since they seem to have a certain amount of power over the victim’s circumstances. These scams can be based in either fear for the targeted individual or a sense of relief. This can appear to the victim that a financial problem may be readily resolved. The victim can be contacted and personal information acquired through telephone call, a phishing email or text and voice messages. In a more frightening variation, they may even knock on your door! Fake websites and bogus identification badges are also employed to “identify” the criminals. The phony websites will look just like the genuine article – but nothing is perfect. Incorrect spelling and suspicious URLs (website addresses will, in most cases, give them away. When English is not your first language, small things can be very noticeable – such as inappropriate humor on an official U.S. government website. The lack of understanding of a country’s customs and way of thinking can often be a glaring error to a genuine resident’s observation.

How to protect yourself

Some ways to protect yourself from this type of identity theft are, as follows:

1. Never send your personal information in a response to an unsolicited email.
2. Don’t click on links to other websites when giving out information. Pull up a genuine website located on a paid hardcopy bill.
3. Don’t respond to a promise of an IRS refund for answering a “survey”.
4. Watch out for long email addresses. This is especially true of addresses that don’t start with the organization’s name.

Visit websites that discuss how to protect yourself from identity theft scams and fraud. The more you know, the better able you will be to protect yourself!

As you surf the Web, you are not alone. As a result, many countries have declared March to be the month to bring awareness to consumers about the dangers of fraud, including Internet fraud. Cybercriminals are estimated to cost consumers in the United States 1.2 billion dollars annually, and the amount of time victims need to correct the problem each year is steadily increasing.

E-commerce is a worldwide-phenomenal growth industry, but some experts believe that it hasn’t yet realized its full potential because of consumer wariness over cyberfraud. The segment of the population that steers clear of e-commerce is a loss of revenue to Internet businesses.

Cyberfraud Is a Lucrative Business

Many criminals are pulling out of the drug trade and concentrating on making money through fraud, including Internet fraud. It is believed that these acts from fraudulent medical claims to Internet scams are beginning to rival the drug trade business in many countries.

Those who regularly shop the Internet can be complacent about cyber criminals. According to a study by the Organization for Economic Co-operation and Development (OECD), many consumers believe that they would never fall victim to an Internet scam, but a study of cyberfraud concluded “being fooled by a scam is not a reflection of the education, age, or background of a victim.” An informed consumer is the best defense against cybercrime.

Email Scams

The first cyber scams originated through emails when most Internet users were only concerned with an overload of spam. An early email one was dubbed the “Nigerian” scam, and was a request for money by a so-called government official or a royal family member from an African country. It was a plea for assistance in transferring money out of a country. The victim needed to send small advance payments to cover banking transaction fees, but never received the promised money.

Since then email scams have become more sophisticated, but any request for advance fees and promises of large payoffs is a neon sign for cybercriminals at work. The best defense is to set your email filters at a high privacy level and not open any unsolicited emails.

Common Online Scams

Various other scams are operated on the Internet. Consumers aren’t as gullible as in the early days of the Internet, so the cyberthieves have had to respond with every more sophisticated schemes. But spam is still a tool for ID thieves. Some common ones are travel and credit-related schemes, fake lottery ploys, web and modem hijacking, and identity theft. Many scams are frauds that have always existed in the real world, but are now transferred to the online community.

Cybercriminals can operate on the Internet under the guise of legitimate traders with professional-looking websites which offer miracle products, work-at-home jobs, rock-bottom prices on items, or “once-in-a-lifetime” investment opportunities. They are also becoming adept at scams through text messages on cell phones.

Internet users are usually aware of “phishing” scams, which trick victims into disclosing personal information online. But to raise the level of sophistication and entice more victims, phishing scams now often include more personal information in the email, leading the victim to believe in the authenticity of the message.

Another deception is using a VoIP phone as the contact phone from websites or text messages, which can record account numbers entered into it.

Prosecuting Cybercriminals

A problem with cyberfraud is that it is difficult for consumers to take legal action when they have been victimized. Consumers don’t have the investigative means to find and identify the cybercriminal, and establish proof of criminal activity.

Another drawback is that the consumer usually doesn’t have the financial wherewithal to take criminals to court. And to complicate the picture, many cybercriminals are in foreign countries as the Internet doesn’t recognize boundary lines.

The Federal Trade Commission collects information on identity theft and helps consumers who have been victimized. Their website is helpful to anyone who would like more information on identity theft or needs to report a crime: http://www.ftc.gov/bcp/edu/microsites/idtheft/.

Reference:
1. OECD, Protecting Consumers from Cyberfraud, October 2006, http://www.oecd.org/dataoecd/4/9/37577658.pdf

At some point in your financial life, you will need to borrow money for major purchases that you want, whether a new car or a new home. Before you knock on a lender’s door, you should find out what your credit score is. That credit score will either enable you to borrow at a desirable rate or it will add more cost to your loan. If you are planning on making a major purchase in the coming months, it is crucial to evaluate your credit score beforehand. This will leave time for you to work on improving your credit score to receive more favorable loan terms, and ahead of many loan applicants who don’t grasp the importance of the credit score.

Added Costs of a Poor Score

Around 70 percent of consumers don’t realize how costly it is to have a low credit score. According to a study by the Consumer Federation of America, a nonprofit consumer agency, and VantageScore Solutions, if your credit score is below 600, you could be paying an extra $5,000 more on a $20,000, 60-month car loan. On a 30-year mortgage, a low credit score can add as much as three full percentage points to the interest rate. This is a difference that can cost a family as much as $2,400 yearly or $72,000 over the life of a $100,000 mortgage.

With the economic turmoil of the last few years, many consumers have been adversely affected. Credit scores sank to new lows during the deep recession of 2008-2009. The Fair Isaac Corporation of the FICO score system revealed that over 25 percent of consumers (43.4 million people) had scores below 600, putting them in the category of poor risks where loans are denied or costly.

Comparison Shopping Doesn’t Lower a Score

One of the biggest misconceptions about credit scores is that a consumer lowers his or her credit score by comparison shopping. Quite to the contrary, every prospective borrower needs to get out and talk to several lenders to compare their loans. It will not affect their credit score, and it should help them find the lender with the best terms for their loans.

When talking to lenders, find out what type of scoring system they use. If your score is a FICO number, the range will be from 300 to 800, with a median score of 622. Since other methods of computing credit scores exist beside the well-known FICO score. You may think that you have a high score at 750, but if the range is from 150 to 934 (the scoring range at the TransUnion credit bureau) that number no longer looks so good.

Credit Card Balances

Another assumption was that balances on your credit card should be kept at less than 50 percent of the available line of credit. In fact, you should use no more than 10 percent of your credit line in order to earn the highest credit score. For example, if your line of credit on a card is $10,000, you need to keep your balance at $1,000 or less.

Your credit score is not hurt by paying off a credit card, but it can be detrimentally affected by expensive purchases. Be careful of what you charge before applying for a car loan or a mortgage, as a large increase to the amount owed on your card will be looked at unfavorably by lenders.

Paying Cash vs. Charging

A good credit score can be built with charge cards, since a record of financial history is needed to create a credit score. If a consumer pays cash for all his or her purchases, there will be no record of the transactions at a credit bureau. It is better to keep a few charge card accounts open to record timely payments, which establishes a credit score and a financial record. Potential lenders want to see timely payments on other accounts to know that you have been creditworthy and will likely pay them back.

Reference:

1. Consumer Federation of America, Credit Scores Are Vital to Your Health,

http://www.consumerfed.org/elements/www.consumerfed.org/file/finance/yourcreditscore.pdf

Three-bureau credit monitoring tracks changes on your credit report at all three major credit reporting bureaus—Equifax, Experian, and TransUnion. The other option is to employ a credit monitoring service that only tracks changes at one credit bureau. The advantage of choosing a 3-bureau credit monitoring service is a closer watch on your credit report, since one-bureau tracking can leave out changes taking place at the other two bureaus. Also, errors can be found easier and corrected earlier. Many consumers prefer to use 3-bureau credit monitoring for the additional security it provides against fraud and identity theft.

The Advantages of 3-Bureau Credit Monitoring

Although companies can vary in their offerings for credit monitoring services, 3-bureau credit monitoring usually includes the following:

• Daily or weekly checks on your credit report and score for changes
• Detailed information on all of your credit card accounts
• Detailed information on all your loans
• A complete report of your payment history
• Information on all companies that have viewed your credit report
• A line-by-line comparison of the information on each credit report from the three credit reporting agencies
• Immediate alerts by email or phone regarding any changes to your credit report
• An advantage in applying for a new loan

The Difference Between 3-Bureau and Single-Bureau Credit Monitoring

As the three major credit reporting bureaus operate independently of each other, they do not share their credit report information routinely. Personal and financial information on your credit report can differ from one bureau to the other, as well as the credit score. Employing one-bureau credit monitoring leaves you unaware of changes taking place at the other two bureaus. Except in the case of placing a fraud alert on your file at one agency, then that agency is required to contact the other two, who must also place fraud alerts on your credit report.

If a 3-bureau credit monitoring service is being used, tracking will include all your credit report information at each bureau. In addition, since some studies have found that 80 percent of credit reports contain some type of  error, these errors can be easily spotted and corrected with 3-bureau credit monitoring.

Evaluating a 3-Bureau Credit Monitoring Service

The first consideration is to choose a monitoring service that matches your needs. As different services monitor at different times, you may need to choose one with more frequent monitoring if you have many credit accounts or have been a victim of identity theft. Identity theft victims need more frequent monitoring, since their financial information may have traveled far and wide on the Internet. If you run a small business without a full-scale accounting team, you may find it helpful to have 3-bureau credit monitoring for the comprehensive nature of the credit reports.

Other advantages to 3-bureau credit monitoring include:

• Unlimited access to your credit reports and credit scores
• Preference to a certain type of customer support—such as emails or phone calls
• Identity theft insurance coverage

Three-bureau credit monitoring will give you the whole picture of all facets of your credit report and movements in your credit score, while presenting the information in a clear and easy-to-understand format. Most importantly, it will immediately notified you of any changes, so that you are alerted at the earliest moment of possible identity theft.

References:

Chicago Sun-Times, 80 Percent of Credit Reports Contain Errors, February 19, 2011,

http://www.suntimes.com/business/3355076-420/credit-nolan-reports-report-financial.html

A credit score is a number derived from your financial record by a mathematical formula to determine your creditworthiness. This number often is the deciding factor to determine whether you will receive loans, credit, insurance, or job offers.

Although there is more than one way to compute a credit score, most consumers have heard only of the FICO method, but other reliable systems do exist.

The purpose of credit scores is to assess the risk involved for a lender to be repaid and for new employers to find dependable and trustworthy people. It is also used by landlords to find suitable renters, and insurance companies to help make decisions on selling policies.

Interpreting a Credit Score

If you want to interpret your credit score, you first need to determine what type of scoring system was used.

Among the three credit reporting agencies (CRAs), Equifax and TransUnion use the more familiar FICO scores, while Experian uses the less popular “PLUS” scoring system. And all three CRAs use another scoring system called VantageScore, which competes with FICO.

In addition, there are other systems which are used to provide educational insight into scores, but are not used to underwrite loans. These include “Score X” from Experian and “TransRisk” from TransUnion.

With the more common FICO score, the numbers can range from 300 to 850, with the median score for American consumers at 723. Lenders consider scores below 600 to fall into the high-risk level where borrowers often default on loans, while 650 represents an average credit-user and those scores above 690 are considered excellent.  

The Experian PLUS credit scoring system ranges from 330 to 830, and the VantageScore system ranges from 501 to 990.

How Credit Scores Are Calculated

Since it is a proprietary tool, the FICO score formula of the Fair Isaac Corporation has never been revealed, but it is known that the calculation is divided into five categories as follows.

• Amount owed (30%)
• Payment history (35%)
• Credit history length (15%)
• New credit inquiries (10%)
• Credit type (10%)

As your past payment record is the best indicator of your future creditworthiness, payment history has the largest percentage of the categories. In this category, problems such as bankruptcies, delinquencies, and debt collections are the drawbacks.

In payment history, several considerations influence how negative factors are viewed, such as the amount involved, the date of occurrence, and how long it took to resolve them. Understandably, the greater the number of negative entries, the lower the credit score.  

In amounts owed to lenders, consideration is given to the sum owed, the account type, and the number of accounts. This category is considered a reflection of your current financial situation. A credit score will be lower if there are too many creditors and large outstanding debts.

In the credit history category, the longer a good credit history is maintained, the better will be your score. A twenty-year credit history will be better than a two-year history.

A consumer’s financial distress may be indicated by too many credit applications and each application will slightly lower a credit score.

If you have only one or two credit cards, you are considered less of a risk. Multiple cards carry a higher risk of default and will usually lead to a lower credit score.

Other Determining Factors

Since your credit score is solely based on the information contained in your credit report, other factors may also be consider by lenders, such as your current income and length of employment.

 If your job is a high-paying position, you are considered a better risk than, perhaps, a seasonal worker. And if you have worked in that position for a long time, you are less of a risk than someone who was recently hired.

References:

1. Federal Trade Commission, Credit Scoring, September 21, 2000, http://www.ftc.gov/os/2000/09/creditscoring.htm

2. MyFico, About Credit Scores, http://www.myfico.com/crediteducation/creditscores.aspx

In a world populated with too many devious individuals, credit monitoring gives you another layer of protection against identity theft and fraud. It involves having your credit report monitored for fraudulent activity, which is done through a credit-monitoring service.

Often identity theft is committed by skilled computer hackers who access your financial information without leaving a clue behind. By the time you realize something is amiss, the criminals are long gone, and you are left with a financial nightmare, including ruined credit. Active credit monitoring allows you to thwart identity theft early when criminals are most likely to be apprehended and damage to your credit is contained.

Identity Theft Is a Growing Menace

According to the Federal Trade Commission, over 10 million consumers are victimized by some form of identity theft each year. Besides being one of the fastest growing crimes in the United States and Canada, it is an ever-evolving threat to consumers as cyber criminals constantly refine their skills. To prevent identity theft from happening, growing numbers of consumers are turning to credit-monitoring agencies to oversee their credit report.

Realizing there was a need for this service, credit reporting agencies began offering credit monitoring to consumers. And in the last few years, many other companies have also joined the field.

How Does Credit Monitoring Work?

Credit monitoring can either be done by the consumer or through a credit-monitoring service. For the latter, a monthly fee is paid to have your credit report monitored daily or weekly. With the service, any changes to your credit report are automatically sent to you by email, alerting you at the earliest possible time. Someone may be trying to open an account under your name, or may be using your social security number, or may be making purchases on your credit cards, etc.

Three-bureau credit monitoring offers the highest level of protection and security, since all three major credit reporting bureaus (CRAs) are monitored. Although it is the more costly choice, it ensures that you are informed of all changes made at each bureau.

If you do your own monitoring, you must keep abreast of the changes made on your own credit report by ordering your credit report frequently, and from all three CRAs. Although not a fool-proof protection against criminal activity, credit monitoring is the best available defense against identity theft and fraud.

Other Points to Consider

Credit monitoring offers other benefits besides added security to your accounts. Credit monitoring is also a good way to monitor credit expenditures since it can provide you with pertinent information on your spending habits throughout the year. In addition, it can point out errors on your credit report, which then can be promptly and properly amended. Accounts which are no longer used can be permanently closed, reducing the amount of financial information available on your finances in cyberspace.

Since credit monitoring cannot guarantee complete protection against fraud, consumers are advised to take the following steps to further reduce the possibility of identity theft:

• Shred personal and financial information papers before discarding
• Delete unsolicited emails before opening them up
• Use strong passwords that avoid the obvious, such as birthdates or numbers in sequence (many sites now let you know the strength of your password, make sure it rates strong or excellent)

 Reference:

1. Federal Trade Commission, Amended Free Credit Reports Rule  Helps Consumers Avoid ‘Free Offers’ That Cost Money, April 1, 2010, http://www.ftc.gov/opa/2010/04/freecredit.shtm

Are you punctual in paying your credit cards? Have you missed a loan payment? What are the balances of your credit card accounts? Have you filed for bankruptcy? All these pieces of information are there on your credit report kept at each of the three main credit reporting bureaus—Experian, Equifax, and TransUnion.

Why is this information important? The answer is your prospective lenders are very concerned about whether you are a good credit risk. After all, they want to be paid back and the data on a credit report will help them decide if you are creditworthy. At the same time, the credit reporting bureaus are for-profit agencies, and they want to provide accurate information. Your credit report may not seem like an important part of your life since it hovers unseen in the background, but it comes to the forefront when you need a place to live, or apply for credit, insurance, or a job. If it reflects adversely against you, it can cause personal and financial headaches. A credit report is also where indications of identity theft or fraud may first reveal themselves.

Parts of a Credit Report

• Personal information:  Your name, address, phone number, Social Security number, spouse, and date of birth are stated on it. It may include your present employer and previous employers, and former home addresses. Different spelling variations of your name may be noted.
• Credit history:  Both current and closed accounts will be listed along with account balances. Late payments will be noted of 30 days and longer. The amount owed on installment loans and mortgages from banks, credit card companies, and auto-finance companies will be included. All information which is accurate will remain on a credit report for seven years, unless errors can be found and then you can request that it be removed.    
• Public records:  Any filings of personal bankruptcy or court judgments against you will be recorded on the credit report. This information will also remain there for seven years, except for bankruptcies which are listed for ten years.
• Inquiry section:  When you or a bank, credit card company, or potential employer orders your credit report, it will be appropriately recorded as an inquiry on your report. Inquiries are divided into two types “hard” and “soft.” A hard inquiry is mostly made by a lender from whom you have requested a loan, and an example of a soft inquiry is when you request a copy of your credit report.

Monitoring for Identity Theft

A credit report often bears the first sign that identity theft has taken place.  Consumers need to monitor their own credit reports or employ a credit monitoring service to protect themselves from fraud. A free credit report is available every year from each of the three credit reporting bureaus and additional reports can be ordered for a fee.

Beware of the signs of fraud on your credit report:

• New accounts opened in your name unknown to you
• A change of your mailing address from your home to another location
• Inquiries from sources unfamiliar to you
• Unexplained debts
• Inaccurate information on personal information, accounts, employers, or social security number

Credit Score

Your credit report will not have your credit score on it, unless you have paid a fee to have it included. The credit score is a number that ranges from 300 to 850 if it is a FICO score, and it is compiled from the data on your credit report. It is an important factor that creditors look at to help them decide if you are worthy of credit, insurance, a job, or as a suitable renter.

Reference:

Federal Trade Commission, Building a Better Credit Report, March 2008, http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre03.shtm

Your financial information is collected at a credit reporting bureau where it is gathered from various sources and recorded on a credit file disclosure, commonly called a credit report. This information is collected from lenders, creditors, utility companies, debt collection companies, and court-issued public records. Since there are three major credit reporting agencies (CRAs), all three of them will have a credit report on you. Information can differ from one agency to another because some creditors only report data to one or two bureaus.

What Do Credit Bureaus Do with This Information?

Credit reporting agencies are for-profit companies that send your credit report upon request to their customers who are your potential lenders, creditors, employers, or landlords. This information helps them make decisions regarding the consumer’s:

• Credit worthiness
• Proper interest rate
• Ability to repay a loan
• Suitability for employment
• Suitability as a renter

Although CRAs have no government affiliations, they are under the watchful eye of the Federal Trade Commission (FTC) and the Office of the Comptroller of the Currency (OCC) to meet strict regulations.

Who Are the Credit Reporting Agencies?

Even though there are other companies involved in gathering data on consumers, these three companies are considered the industry leaders:

• Equifax—1-877-576-5734; www.equifax.com
• Experian—1-888-397-3742; www.experian.com
• TransUnion—1-800-680-7289; www.transunion.com

Under the Fair and Accurate Transaction (FACT) Act, each CRA will provide  consumers with one free credit report every 12 months. All three reports can be requested at once or staggered throughout the year. Requesting three reports at once is considered an advantage by some consumers as it allows you to compare information on each report to find errors or omissions. Other consumers prefer to stagger the requests every four months to monitor their credit reports more often for fraud. You cannot go directly to a credit bureau’s website to order your free credit report, since you will be charged for it. You need to order your report at the official website of all three CRAs. Your request for a free annual report can be made one of three ways:

• At this website; www.annualcreditreport.com
• Calling 1-877-322-8228
• Completing the Annual Credit Report Request Form and mailing it to this address:
  Annual Credit Report Request Service
  P.O. Box 105281
  Atlanta, GA 30348-5281

In addition to the free annual report, if you were denied credit, insurance, or a job, you can request a free report in all states. Being unemployed, on welfare, or having an inaccurate report due to fraud also qualifies for a free report. Credit reports can always be purchased at anytime for a fee for additional monitoring.

Where Is My Credit Score?

Your credit score is not furnished with your free annual credit report to the disappointment of many consumers, as this number is considered the most important piece of information sought by consumers and creditors alike. In order to have your credit score included with your credit report, you will need to pay a small fee to each CRA.

Reference:

Federal Trade Commission, Free Annual Credit Reports, http://www.ftc.gov/bcp/edu/microsites/freereports/index.shtml