It has been a long time since we mentioned the government mandated site at
which consumers can obtain one free credit report a year from
each of the three major credit bureaus. The system was phased in during 2005
and consumers flooded to the site but the necessity of keeping on top of credit
histories has probably faded as a priority in most people's minds. Therefore,
we are here to nag you again.
Credit experts advise all individuals to check the information
held by the bureaus on a regular basis, not only to be able to catch and correct
report errors on individual reports and historically there have been many,
many mistakes, but also to watch for indications of identify theft such as unfamiliar
accounts or a change in mailing address.
Given some of the "human interest" stories reported on television,
parents would probably be well advised to check for reports on their minor children,
even those that are way too young to enter into a contract. There have been
too many reports of identity thieves ruining the credit of children who are
still in middle school. While we did not see any such requirement when we visited
the site recently, back in 2005 we noted that to order a report for a minor
child (defined as less than 13 years of age) you will be required to provide
a copy of the child's birth certificate, Social Security Card, and proof
of your guardianship.
There are many places to obtain a free
annual credit report; lenders frequently offer them as a promotion to get
your business; it is highly recommended that consumers use the official site,
www.annualcreditreport.com. The site links to all three bureaus, TransUnion,
Experian, and Experian. One can obtain all three reports at one time or space
out the requests so as to obtain information every four months all year, every
year. In the two years that have elapsed since I checked my own report the format
from TransUnion appears to have been simplified and clarified and was very simple
to read and understand. Experian was also an easy read. I chose to save Experian
for another day.
We have received a lot of comments
and complaints from readers who have run their credit reports that those
reports did not include a credit score. Nope. The government
mandate included only the reports themselves. Credit scores are considered proprietary
and the credit bureaus are no fools when it comes to making a buck. You can
get your score, but only at a price albeit a modest one. Also, the score you
receive will not be the Fair Isaac or FICO
score with which people are most familiar.
The three credit bureaus have always provided banks with their own individual
versions of a FICO score. These scores were widely criticized by consumer groups
for being inconsistent - I found around a 10 percent deviation across my four
scores when I refinanced two years ago. In answer to these critics, in early
2006 TU, Experian, and Experian formed a new company, VantageScore Solutions,
LLC to market a new credit scoring system to "benefit consumers and credit grantors."
The new system, called VantageScore
is the one you will receive if you chose to pay $5.95 to any of the three bureaus
while on the website. For an additional $2 they will provide a debt analysis
to go along with it.
Officials have said that the new system will reduce deviations among credit
bureaus by about 30 percent but we have no way of judging if that is true.
VantageScore uses a wider range of scores than FICO. The later scales in a range
of 300 to 850 based largely (a total of 65 percent) on payment history and total
indebtedness with lesser weight given to length of credit history, amount of
recent credit, and the types of debt. The new VantageScore ranges from 500 to
990. VantageScore will also group scores into alphabetic categories covering
a 100 point range that will return lenders to a more refined version of the
old A, B, C credit rankings. Thus, from 501 to 600 points the borrower will
be branded as having "F" credit while at 901 plus the grade will be
FICO makes their scores and other products available for sale on their own
websites, of which there are several. myfico.com offers a one year subscription
to its score monitoring system for $89.00 with a 30 day free introductory period.
We could not locate a price for a single score report.
If you are about to apply for major credit it is probably worthwhile to pay
$5.95 for a VantageScore, but since a credit score is a moving target it isn't
really necessary to track yours on a frequent basis. Just be sure you know that
the components that affect that score it are accurate and that no one is playing
around with your credit or your good name. A regular review of your credit report
will accomplish this.