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Credit Report Check Now a Necessity

By Faye Mergel
Published: Sunday, August 15th, 2010

102484996The Fair & Accurate Credit Trans Act (FACTA) is a law that allows every American consumer to obtain a free credit report every twelve months. Many consumers are well aware of this, but many aren’t. The government, economists and even financial institutions advise consumers now and then of the importance of this annual check. Purposes of the check are to provide timely error correction and improvement of accuracy check on the reports.

FACTA outlines the permitted reasons for using the reports. For one, the reports will provide information in relation to credit transactions that will help determine whether the consumer is worthy to be extended with credit. It will provide enough information whether collectability is assured and whether the consumer is a low default risk profiled consumer. Second, it is intended for employers who make hiring decisions based on the information contained in the report. Third, the details are used in connection insurance underwriting. Fourth, the information could help determine the eligibility of the consumer to obtain a license and consider the applicant’s financial status or responsibility. Fifth, the information is used to assess credit or prepayment risks connected to an existing credit.

Knowing the purposes of credit reports alone makes it necessary for consumers to check their credit reports regularly, which is at least twice in a year. Free reports are available for consumer viewing every twelve months in each of the three major credit bureaus – Experian, TransUnion and Equifax. The reports can be availed online at thru some reliable websites or by contacting the bureaus by phone or certified mail. The consumers are required to provide personal information, such as name, addresses, social security number and date of birth. A total of three credit reports can be availed of for free and it is advisable to obtain them all.

The credit report or credit history contains pieces of information that showcases the credit transactions entered into and actions made by the consumer. Any error in the credit reports that remains uncorrected or ignored can have a negative impact on the decisions of the third party viewers, such as lenders and employers, and may also pull down the consumer credit scores. Some errors can stay in the report for certain number of years which are eventually damaging or otherwise if ignored. For instance, information about judgments or foreclosures would stay in a report for seven years. Checking the report at least annually would also enable the consumer to determine whether he or she is a victim of identity theft, a crime that steals someone else’s identity for financial gain. This will force the consumer to apply security measures on the credit report to avoid future damage by requesting for fraud alerts or credit freeze services.

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