Credit reports

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*This information is for U.S. residents only.*

By federal law, the big three Credit Bureau are required to provide each individual with one free credit report per year.  If you want to check your credit report more often, you will have to pay for the reports, but you will get one free report from each agency every year.  All you have to do is request it--it's not automatic.

The three national credit bureaus are;

Equifax - http://www.equifax.com/home/
Experian - http://www.experian.com/rd/eg.html
Trans Union - http://www.transunion.com/

There is a fourth national credit bureau named Innovis, but it does not currently seem to factor into decisions for denials of credit, insurance or employment. It is more in a development stage.  There are also independent, non-national, local credit bureaus throughout the country that are generally affiliated with one of the 3 national systems, but may not be owned by the national credit bureaus. Local bureaus are sometimes for-profit companies and sometimes non-profit associations of lender/members in a particular geographical area.  For this topic, I will only deal with the big three.

The 3 national credit bureaus are competitors of each other, and they do not normally share their credit information except in special cases. That is why it is important to order a credit report from all three credit bureaus.

You can either request reports from each of the three bureaus individually, or you can visit http://www.annualcreditreport.com/  This site was set up in cooperation of the big three credit bureaus to make requesting your annual reports easier.  Keep in mind, this site is only accessible through ISPs located inside the U.S.  If you have a foreign ISP, like me, you will not be able to view the site (I can not verify the content of this site).
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What do you do with your reports?

First and foremost is to check for "bogus" information that may indicate that someone has stolen your identity.  Every place that you have credit will show up on one or more of these reports.  If you see something from a lender that you have not had any dealings with, chances are your identity has been stolen.

You can also use these reports to improve your credit score.  You are permitted to contest any and all bad marks on your report.  Once an entry has been contested, the credit bureau will contact the agency that submitted the entry for an update or rebuttal.  Many times the individual agencies will check your history with them, and if you show improvement, they will raise their entry score, raising your overall credit rating.

If a credit agency does not respond within 30 days, the credit bureau will simply delete that entry from your report altogether.  By removing the bad marks, your overall score will go up.

In the past, I have contested every entry that was not a perfect score.  I have had some agencies raise their score, and I have had some bad marks removed due to lack of response.  I have seen my credit scores go up simply because I contested everything negative.
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Keep in mind, there are many companies that will offer to get you your credit reports for a fee.  Don't even bother with those companies when you can get your own reports for free.

Also, every time a report is requested by anyone other than you (banks, credit unions, car dealerships, etc.), your score automatically drops a few points temporarily.  Your score will raise again automatically over time.  This is important when you are looking for a car loan and your credit is already marginal.  The more places you look for a loan, the more reports are requested and the quicker your score drops.  It may seem like a good idea to apply for a loan from multiple sources to get the best deal, but if you apply at five different places, by the time the fifth places get their report, your score has dropped because of the previous four requests and you will look like a higher risk to them.
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Credit bureaus are generally regulated by the Fair Credit Reporting Act (FCRA), which is the Federal law generally covering credit bureaus and credit reporting in this country. Individual states may also have their own versions of the law.

Under Federal law credit bureaus and credit reporting companies known as CRAs (consumer reporting agencies) have numerous responsibilities to protect consumers and their credit information. A Summary of the FCRA is at http://www.creditreporting.com/fair-credit-reporting-act-law.html .  The complete text of the Federal law is at: http://www.ftc.gov/os/statutes/fcra.htm
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Credit Bureaus are permitted to sell your information to other companies who use the information to build mailing lists.  In compliance with the Fair Credit Reporting Act of 1996 the credit reporting industry has designated a single toll free number that will allow consumers to opt out of promotional mailing lists sold by credit bureaus.  The system is an interactive voice mail that requests information necessary to opt out of such lists. 

To use the system, consumers should call (888) 5 OPT OUT and follow the voice prompt.   Once the information is recorded, an e-mail is sent to the three bureaus daily and posted to consumer files.   The number is available 24 hours a day.
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For more information, follow the following links;

http://www.ftc.gov/bcp/conline/pubs/credit/freereports.shtm
http://en.wikipedia.org/wiki/Credit_bureau