In the new world of credit reports, know who’s looking at yours, and why

April 02, 2010|Personal finance, Candice Choi, Associated Press

Now that it will be easier to find your free credit report, you may be curious about who else can see it and how it can be used.

Starting today, a new Federal Trade Commission rule will require websites advertising free reports to direct consumers to the government-approved www.annualcreditreport.com. TV and radio ads must do the same starting Sept. 1.

The problem is that these ads typically don’t disclose that the advertised free reports are part of a package of services that can cost up to $14.95 a month. Consumers may not realize they can get free reports with no strings attached. Once a report is in hand, however, it raises a slew of other questions. Here’s what you need to know:

■There’s more than one freebie a year. You are entitled to a free copy every year from each of the credit reporting agencies: Equifax, Experian, and TransUnion. On top of that, you can request free reports if you’re the victim of identity fraud or are unemployed and looking for work. The idea is that you should know what’s on your report in case a potential employer wants to pull it. You’re also entitled to free copies if you think your report has errors, or if it is ever used against you.

Reports from the three agencies should contain pretty much the same information, but differences can arise when lenders don’t provide data to all three.

■Know who can pull your report. Only banks, debt collectors, landlords, and those with a valid interest can pull credit reports. Prospective employers also need written consent to run checks on job applicants.

Credit reports sent to employers don’t include a date of birth or the names of spouses on joint accounts, since employers can’t discriminate based on age or marital status.

■A credit score doesn’t define you — several do. Most people understand credit reports are the foundation for credit scores. What you may not realize is a person can have multiple scores. A company called FICO develops the most widely used scores, but they’re not the only ones. VantageScore has gained popularity, and all three credit bureaus now sell both to lenders. The version you’ll get depends on the credit bureau you go to.

TransUnion sells both to consumers. But Equifax only sells FICO scores, which range from 300 to 850. Experian sells VantageScores, which range from 501 to 990.

If that isn’t complicated enough, the FICO scores you get from credit bureaus can differ, for a couple of reasons. There may be slight differences in the credit reports each bureau has for you. Additionally, FICO develops a specific formula for each credit bureau. In most cases, the differences shouldn’t amount to more than a few points.

Credit scores aren’t free, however. You can buy them from a credit bureau or from MyFico.com for $15.95.

Candice Choi writes for the Associated Press.