If you're considering applying for a new loan or refinancing an existing credit agreement, you'll need to know how to obtain a free credit report. This information not only affects the likelihood of getting acceptance, it also influences the rate of interest that you'll pay to the lender or card issuer.
Informa Research Services revealed that a 30 year fixed-rate mortgage for $200,000 costs you $198 per month extra if your score is 620 to 639 rather than 760 to 850. That's $71,280 of additional interest over the life of the loan.
Things That Hurt Your Credit Score
An article published on MSN Money by Liz Pulliam-Weston on November 11, 2009 called "5 ways to kill your score" revealed that paying your credit card more than 30 days late will cause a 680 score to drop by 60 to 80 points. Maxing out a card will cost you 10 to 30 points. If you file for bankruptcy or proceed with a debt settlement plan, you should expect your score to drop by 150 and 65 points, respectively.
The problem is that creditors don't know whether your actions or an error has led to your score falling. It's not uncommon for mistakes to be found and these need to be corrected before you apply for a mortgage, loan or credit card. The onus is on you to verify and correct any erroneous information.
How Can I See My Credit Report for Free?
Under the Fair Credit Reporting Act, all U.S. citizens are legally entitled to a free copy of their report once every 12 months. However, the Federal Trade Commission (FTC) has only authorized a company called annualcreditreport.com to provide this information. Access to your score or a monitoring service costs extra, regardless of whether they're FTC-approved or not.
You may wish to get your report from all three credit reference agencies at the same time or order a copy once every 4 months. The data each agency holds is completely unique. If you want to be 100% certain that the data held about you is correct, you'll need to validate all of the information collectively.
How Do I get My Credit Report for Free when I've Already Received a Copy?
If you've already received your free annual report, you may still be able to get a free copy if, for example, you've been the victim of identity theft. However, it's important to appreciate that a note will be made on your file to help prevent an unauthorized credit application from being approved.
This means that instant approval on loans, mortgages and credit cards won't be possible until the restriction has been lifted. In other words, don't claim to have been the victim of fraud unless you're genuinely concerned that a criminal has access to your personal information.
Can I Get a Free Credit Score?
Many American's feel duped when they discover that they can obtain their report for no charge, but have to pay to see their score. The current legislation doesn't currently entitle you to see the score and that's why companies are legally permitted to charge you an additional monthly fee.
If a company is prepared to provide your score as part of a 7-day trial, take advantage of this generous offer. Provided that you cancel your subscription before the trial ends, your card won't be charged. However, you may prefer to continue with the subscription as it enables you to monitor all of your credit activity online 24-hours a day.
Sources
Pulliam Weston, Liz. (Nov 11, 2009). "5 ways to kill your score." MSN Money
"Why is your FICO score so important to your financial health?" MyFICO
Asa Ghaffar - Asa has over 10 years of practical experience in loan approval, secured lending, bad credit repair, stock trading and debt management.
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