Every monetary movement you make or whenever you are using plastic money, all your financial transactions get recorded in the credit report. When you are applying for credit, either from banking or a non banking institution, your detailed financial information is sent to the credit bureau. Some of the information includes the status of your credit accounts; updates on your personal information e.g. change of address etc. The information is retained so that your creditworthiness can be determined.

Since majority of the lenders have adopted the method of “risk-based pricing”, your credit report has become increasingly important for lenders and also for yourself.

Importance of credit report

Importance of your credit report cannot be undermined because it determines what Annual Percentage Rate or APR you qualify for, whether or not you should be given credit and what terms and conditions should be applicable in your case. You can also prevent identity theft by keeping track of your financial behavior. A credit report is required by your employer, landlord, insurance carrier etc. to find out your financial vulnerability.

The fed has made it mandatory for the credit bureaus to provide a free copy of the credit report to all consumers at least once a year. Earlier the 3 credit bureaus namely, TransUnion, Equifax and Experian were responsible for providing credit scores. However with effect from February this year Experian has stopped providing credit scores. You may continue to receive credit scores from the other 2 credit bureaus.

Fair Credit Reporting Act or FACTA

The FACTA makes it mandatory for the 3 credit bureaus to provide you with a copy of your credit report for free. As per federal law, you are eligible for a free credit report under the following circumstances.

• If your application for credit has been turned down by your lender/creditor
• If the insurance carrier has refused your insurance application
• In case your employer refused to employ you in his organization.
• In case you are on a welfare program, you are entitled to receive a free credit report.
• If you are out of job and plan to get employed within the next 60 days, you can request for a free credit report.

You can request for the credit report within 60 days from the time you received the denial notice. It may be so that the free credit
reports you receive from the 3 credit reporting agencies or credit bureaus may not be the same. If you happen to find errors in your
credit report, report the same to the CRA or the credit reporting agencies.