Article  Why It Is Important To Request Your Free Credit Report Annually Under federal law in the United States, each individual is eligible to receive a free credit report from each of the three credit reporting agencies each year. This program is monitored by the United States Federal Trade Commission with other approved providers. There are several very good reasons to complete this simple procedure, but the biggest one is that knowing what is on your credit report will allow you to make corrections and check for any unauthorized use of your credit or name within financial areas. The three reporting agencies in the United States are Experian, Equifax and TransUnion. Each uses a slightly different way of calculating your credit, all based on FICO or the Fair Isaac Company model. These credit services look at your payment history, amount of money you currently own and your credit limits that are still available. Your credit history, or the amount of time you have had credit is a minor component as is the amount of new credit you have applied for over the last year. Each component has a different weight, which results in a number between 300 and 850 being generated from the model. Typically a score of over 620 required to obtain most types of standard credit. Anything less that 620 typically results in very high interest and payments and is considered a bad or risky score for lenders. Generally scores lower than 580 are going to be very difficult for banks to lend to and major credit card companies will typically avoid such consumers. Less reputable credit companies and loans then make huge profits by charging incredibly high interest rates on very minimal loans. Obtaining a free credit report once a quarter, which can be done by requesting a free report by one of the reporting companies each quarter, will allow you to constantly monitor your report. If your identity of financial information has been compromised you will see multiple requests for credit and be able to report this to the credit companies and even put extra security locks on obtaining loans or applying for credit. This process includes completing a fraud report, which then is recorded by the Free Trade Commission to provide you with protection in the future. This prevents the thief from being able to take out a credit card or loan in your good name. Remember that all applications for credit will pull down your FICO score, which in turn could have a significant impact should you apply for a business, personal, home or car loan in the near future. If there has been a true breach of your identity and a fraud report has been filed, there are still other steps you will need to take. Closing all compromised accounts as well as working with your creditors to file any necessary documentation is also essential. Depending on the credit card or service you are using there may be internal protection for you in the event of identity theft, but you will need to provide documentation and information as requested to allow the companies to proceed with the necessary investigation and prosecution of the individual responsible. In general all consumers should carefully review their free credit report to look for any thing out of the norm. Checking to make sure any late payments or missed payments are accurate on the report. In addition if any accounts have been closed, make sure this is also accurately reflected on the report and dispute the credit errors immediately. Category Finance Author WOA Member Add To Favorites Print This Article Email Article To A Friend Post Comments   Rate This Article (0) 1 - Poor2345 - Good678910 - Excellent Added On 20 January 2010