How to Obtain and Read Your Free Credit Report

Did you know that, by federal law, you are entitled to obtain a free credit report once a year? Not only that, but you may obtain an additional free credit report if any of the following conditions apply:

• Incorrect credit information due to theft or fraud
• Unemployment, with intention of job search in 60 days or less
• Denial of loan application
• Welfare collection

You may request your free annual credit report by writing to the Annual Credit Report Request Service, at P.O. Box 105281, Atlanta, GA 30348-5281. You may also call the agency's toll-free number 1-877-322-8228. Or, you may request your credit report online through web sites like Annual Credit Report. If you make your request by mail or phone, allot 15 days for your paper copy to arrive. If you submit your request online, you will receive your report instantly.

Your credit report will usually come from one of the three major credit reporting bureaus, such as Equifax, Experian, or TransUnion. The credit report will consist of 4 main sections, including:

1. Personal information. Typical items include your name, address, social security number, and employers.
2. Tradelines. Your loans and credit accounts, the dates when each account was opened, credit limits and loan amounts, account balances, and payment histories are included here.
3. Inquiries. Lenders/creditors may have checked your credit history for either promotional purposes (also called soft or involuntary inquiries) or as part of a loan/credit application (also called hard or voluntary inquiries).
4. Public records. Bankruptcies, foreclosures, liens, wage garnishments, court reports, and collections are listed here.

When you start looking over your credit report, you'll notice different letters and numbers being assigned to different items in the tradelines and inquiries sections. For tradelines, you will encounter the following alphanumeric codes being applied to your accounts: J (joint), I (individual), and A (authorized user), C (comaker, or cosigner), and T (terminated). Regarding the types of accounts, there are the following: O (open account), R (revolving account), and I (installment account). Numbers that are assigned to each of your accounts range from 1 to 9 and reflect each account's payment status as shown:

0: Approved and not yet used/too recent to rate
1: Pays as agreed
2: Past due 30 days or more
3: Past due 60 days or more
4: Past due 90 days or more
5: In collection/past due 120 days or more
7: Makes regular payments
8: Repossessed
9: Charge off (delinquent account that has been closed by creditor)

There may also be letter and number combinations, such as O1 or R1, for open account/pays as agreed and open account/pays as agreed, respectively.

Regarding credit report inquiries, you may see codes for both soft and hard inquiries. Equifax denotes inquiries by the following codes:

PRM: Creditor pre-approval
AM/AR: Creditor inquiry for a possible change in your financial situation

It is important that you review your credit report at least once a year in order to correct any false or inaccurate information. Likewise, if there are any account delinquencies, you are well advised to settle with the creditor first before the delinquencies are transferred to a collection agency (which lowers your credit score and stays on your report for 7 years).

If you decide to go ahead with credit report repair, you will need to send a letter to the reporting agency and ask for credit report help. If there is an error on your report, support your case for a correction by including cancelled checks and account statements. Send the letter by certified mail so that there is proof of delivery to the reporting agency.

It will take 30 days for the credit bureau to go over your information. You may be asked for additional information, or the error may be corrected without any additional documents or contact required. If there is a correction, you will be receiving an newly updated (and of course, free) credit report.

Keep in mind that only your credit report, and not your credit score, is available for free. However, the charge for a credit score is usually not very high; prices run from $7.99 to $14.95. You may purchase a credit score from any of the following reporting agencies: Equifax, Experian, and TransUnion.