It's Yours--For Free

By Jean Chatzky

Your credit report affects your financial life in ways you may not imagine. It's the linchpin that determines whether you can get a mortgage, car loan or credit card--and how much interest you'll pay. It influences whether you can get utilities, and whether you'll have to pay your provider a deposit. It even affects the rates you pay on homeowner's and auto insurance.

And it's often wrong. A June study by the U.S. Public Interest Research Group found that a shocking 79% of credit reports contain mistakes. What's more, in 1 out of 4 reports, the mistakes are serious enough to result in a denial of credit.

The good news: starting Dec. 1, consumers in the U.S. will be allowed to receive--for free--one credit report from each of the three major credit bureaus every 12 months, thanks to the Fair and Accurate Credit Transactions Act. It's a new benefit that should be exercised at least once a year, particularly if you're going to be applying for, say, a new mortgage. Once informed of a discrepancy, the bureaus have 45 days to fix the problem, but generally do so within 10 to 15 days.

This new entitlement will roll out gradually across the country over the next nine months, with consumers in Western states beginning first. The Midwest will go live March 1, the South June 1, and the East and U.S. Territories on Sept. 1. The three major credit bureaus--Equifax, Experian and TransUnion--have set up a toll-free phone line (877-322-8228) to handle requests, or you can send a written request to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, Ga., 30348-5281.

But the fastest way--not only to receive your report but also to dispute inaccuracies-- is a new website, annualcredit report.com Don't be surprised when the site asks for personal information for security purposes (it's safe to provide it). You'll then be sent to an authentication page for the bureau you select, in which you'll be asked more questions-- about recent transactions and the size of outstanding loans. Again, providing answers is safe. The one thing to beware, however: once you've been authenticated, your report will pop up onscreen; if you close the window, it's gone, and so is your freebie for the year, so print it out immediately.

One other bit of good news: you don't have to pull your free report from all three bureaus at once. So if you want to be truly vigilant about monitoring errors, you can spread your requests throughout the year. And the bureaus may even eventually iron out the lapses in their system that lead to mistakes in the first place.

You can e-mail Jean, a columnist, at [email protected]