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What is a Free Annual Credit Report

Maya Pillai Jun 30, 2019
Credit report helps in generating your credit score and gives an insight into your credit history. As per law, every American citizen is entitled to get a credit report for free, once in twelve months.
A car or a house is purchased by most of us through a car loan or a home loan; students get loans to pay their fees and to meet other expenses. All of us make purchases using credit cards. However, have you ever thought how you would be given credit by a bank or a credit card company, who knows nothing about you?
For a bank and a credit card company to grant a loan and issue you a credit respectively, they need to have certain amount of information about you. They collect the information regarding your credit history from an agency known as Consumer Reporting Agency (CRA). This agency records all your credit activities to generate a report known as credit report.

What is it?

A credit report is a document that reveals your financial position, and it is used to generate credit score. It contains information such as number of credit cards you hold and the names of the credit card companies who issued it, all the loans (home, auto, personal, and mortgage loans) taken and names of the financial institutions that have granted them.
It also includes the information regarding the late payment of your utility and credit card bills. If you have filed for bankruptcy, that is also entered and will be in your record for the next ten years. In short, it reflects yours credit history and the credit rating. Your score decides whether you are eligible for a credit or not.

Free Annual Credit Report

On September 1, 2005, the consumer protection agency of the US government, Federal Trade Commission (FTC) passed a law by which, every American citizen is entitled to get a free annual credit report. It is generated by the three main credit bureaus of the United States ― Equifax, Experian, and TransUnion.
You can also request for a free online copy at annualcreditreport.com. Once you apply online, you would have to wait for at least fifteen days before you get it.
Apart from getting a free copy from the three credit bureaus once in a year, there are times when you are eligible for receiving it. You can apply for a free credit report from one of the bureaus, if,
  • You find any discrepancy in it.
  • If a credit card or an insurance company has rejected your application on the basis of your credit rating.
  • If you are unemployed and plan to look for a job in a time span of 60 days.
  • And if you are living on a welfare program.
Suppose you are not facing any of the problems mentioned here, but wish to receive a free copy, you can take the free membership of any of the online credit repairing agencies. However, ensure that you cancel your membership once the trial period is over; else you will have to pay a small charge for the same.
It is not necessary to order your copy from all the three credit bureaus at the same time. It is always wise to check your credit rating once in three months to find out, if there are any incomplete or inaccurate entries in your report.
In case you come across any inaccurate entries, you can report to the consumer reporting company or the credit bureau in writing regarding the discrepancies. The bureaus would conduct an investigation on your behalf within 30 days.
The bureaus would also make the necessary changes if there are any inaccurate entries. Once the investigation is complete, the consumer reporting company will send you a free copy with the changes made.