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    Credit Reports

    Credit reports can be both a benefit and a cause of problems. They allow creditors to assess the likelihood that a potential borower will pay back a loan and allow those with good credit to receive better rates than those with poor credit. This keeps those who are responsible from having to pay more to cover the losses caused by those who are not responsible. The problem is that credit reports are often incorrect, and incorrect information in your report can cause serious problems. Often credit reports make it into the wrong hands, and the information in the report can be used by criminals committing identity theft. On the positive side, in your own hands, your credit report can be used to detect potential identity theft, if you look for new accounts that you have not requested, new addresses, or reports of unpaid charges that you never made.

    You should view you credit report at least once a year, and you now have the right to exmine your report for free. If you manage you inquiries correctly, you can view you report for free three times per year, once every four months, roating your request across the three major credit bureaus. To request free access to your credit report visit:

    What's your credit score?

    Credit Scores vs Credit Report

    Many credit decisions today are based on your credit score, a grade calculated based on the information in your credit report. The most widely used credit scores are based on the Fair Isaac grading system (FICO). These scores are calulated by each of the three major bureaus based on the information on their version of your credit report. While diffferent creditors use different ranges to define their best and worst credit risks, a score over 720 will usually put you in the top tier of borrowers.

    Credit scores typically fall in the range from 300 to 850, and although the exact algorithm for calculatoon is proprietary, experts believe that the score is based 35% on yoru payment history, 30% on outstanding debt, 15% on length of credit, 10% on the number of recent credit inquiries, and 10% on the kinds of credit you currently hold.

    While your credit scores are not included in the annual free credit reports you received, you can get your credit score from each of the bureaus very inexpensively (for example $1) by siging up for a trial of paid credit monitoring services such as the Privacy Matters Identity Protection Service . Although these services can be expensive, it is worthwhile signing up for the free or low cost trial (which usually lasts a month), as long as you are ready to cancel the service before the free trial is complete. You might even find that you want to stick with the paid service if you want automatic alerts of new inquiries to your credit file, and the convenince of reports more often than once per year. Many years ago, when I called to cancel my service from such a program, I was offered rebates that brought the cost of the paid service low enough that I decided to keep the service.

    You should also check out the at class action settlement by TransUnion. They will be providing up to 9 months of credit monitoring free to those members of the class that opt for settlement in that form. The class is very large and it is very likely that you are part of it. You will have to wait until the settlement is approved and put into action, but there is little reason not to take part. If you need monitoring sooner, then sign up for one of the other services for the time being.

    Pre-approved credit cards

    Do you get lots of "pre-approved" credit card applications in the mail. The way the credit card companies get your name is by asking the credit-bureaus for the names and addresses of people whose credit matches a particular profile. Although the card companies do not received a full credit report for each "pre-approved" applicant, they are still receiving information from the credit-bureaus which you have not given them permission to request.

    If you look at your credit reports, you will find the names of the companies that have received your information for marketing purposes (fortuantely, this list does not appear on the reports requested when you really apply for a loan, so they don't affect your credit score). Personally, I find these offers especially annoying because I can't just throw them out, but have to shred the applications.

    If you would like to opt out of receving pre-approved credit applications which are based on these mailing lists provided by the credit bureaus, you can do so by visitiing: report visit:
    where you can ask to have your name removed from these lists permanently. This will not stop receipt of all credit card offers, since you are still likely to get those based on appearance of your name and address in other lists like those from frequent flier programs, other organizations, etc., but it will reduce the number of these applications you receive.

    Placing a Fraud Alert on your file

    If you want to make it more difficult for someone to open an account in your name, You can place a fraud alert on your credit file. You can place a fraud alert on you file by contacting any one of the three major bureaus, and they should alert the other credit bureaus to also place a note in your file.

    The fraud alert can last from three months to a year (it is different for each bureau) and it does not completely prevent someone from opening an account. What the alter does is it tells credits that retrieve your credit file that they should contact you directly before granting new credit. The alter will contain a phone number where you may be reached. Note that the fraud alert can be ignored by creditors, but most will see it as a sign of possible fraud and contact you to verify your intent to open an account.

    Credit Report Freeze

    In California, Louisiana (and Texas, Vermont, and Washington if you have been the victim of identity theft), you have the right to request a freeze of your credit report. Other states are following suit. A credit freeze prevents potential new lenders, employers, or insurers from checking your credit report, making it hard for anyone to open credit in your name (at least from sources that check credit reports). When you freeze your report, you are assigned a personal identification number that you can use to "thaw" the file and allow access when you need to apply for credit, housing, or another benefit that requires a credit report.

    Depending on the state, and whether you have been the victim of identity theft, there may be a fee to freeze your file, and/or to unfreeze it. There may also be a delay of a couple of days when you unfreeze your report, making it less convenient for you when you need to apply for credit. Planning ahead to lift the freeze before you apply will save some of the hassle that might otherwise occur if your creditor requested your report and is denied.

    To request a credit report freeze, and for details regarding freezes in your state, you should contact each of the three credit reports directly. It will be necessary to freeze your report at each of the three bureaus separately.

    An educational warning:

    If you follow the links that I have provided on this page, what you are doing is a little bit risky since you probably do not know me and don't know wether I am refering you to legitimate sites instead of sites that were set up by criminals to steal your personal information. While I know these are the right sites, you don't, so to be safe, you really should research the sites on your own to be sure that they really are legitimate.

    While it might take some time on your part, the best way to verify information like this is to go to your paper phone book, look up the number of one of the major credit bureaus, and call them to ask if the name of the sites I have provided are correct. Then type the name into your browser (don't just follow the link). When you call, don't let them talk you into paying for access to your reports, as they would likey try to upsell you on their paid services.

    You may also be able to find these links starting from the credit bureaus web sites themselves, but you need to be careful to make sure that the web site you start from is their real site, and not that of an imposter.