Credit Report

For years if consumers wanted to know their credit score, they had to buy it. But starting this year, potentially millions will be able to get their score for free thanks to new federal regulations. Moreover, the score will be the actual one used to determine a consumer's creditworthiness — not one of the knock-offs offered online that can be off by dozens of points. "Knowledge is power," says Ed Rice, general counsel for Zoot Enterprises, which provides software to help financial institutions make credit decisions.

The Consumer Federation of America released its second annual survey of our credit score knowledge. The good news: substantial improvement over last year. The bad news: plenty of misconceptions still exist. Let's talk about the second group. The CFA survey found: -     44 percent of consumers knew that a credit score measures risk of not repaying loans, which about one out of five believed. -     One-third thought each inquiry into a credit report reduces a score.

As anyone who has ever been turned down for a credit card, car loan or mortgage because of a faulty credit report can attest, getting such errors corrected is often a tedious, frustrating experience. Even relatively minor mistakes can result in major delays and inconvenience; at worst, people's lives and reputations have been ruined because credit bureaus have passed on inaccurate or incomplete information about their credit histories.The problem affects millions of consumers. A 1991 study by the Consumers Union found nearly 50 percent of the credit reports contained at least one inaccuracy, and a fifth had an error serious enough to damage the applicant's creditworthiness.

Let's turn to baseball to sum up the Maryland legislative session's impact on consumers: It had a few singles but no home runs. "We made a lot of progress on some really critical issues," says Marceline White, executive director of the Maryland Consumer Rights Coalition. "But there is a lot of work left to do and in some places we had some setbacks. " Last year's legislative session was strong on consumer protections, with Marylanders still reeling from the foreclosure crisis and weak economy, White says.

WHEN YOU APPLY for a job, you expect the company to check your references. But do you also expect it to pull your credit report?Tens of thousands of employers take a peek at this slice of your personal life: Do you have big debts, do you pay bills on time, have you ever been sued by a creditor, is there a tax lien on your home or a bankruptcy in your past?Employers use these reports "to serve as a general indicator of an applicant's financial honesty and personal integrity," says Experian (formerly TRW)

Finally, reading a credit report doesn't require a degree in hieroglyphics.TRW Credit Services, one of the major credit-reporting firms, has produced a document that eliminates the numbers and codes that have confused many consumers."

Last year TRW, the giant credit reporting company, bowed to public and court pressure.Today it's showtime. Starting now, if you want a copy of your TRW credit report you're entitled to get one free. If you want more than one copy within a year, TRW has reduced the fee to $7.50 from $15 per report. And if you've been denied credit, you're also entitled to a free report to help understand why.All this is in response to government complaints and suits filed by the FTC, Michigan and 18 other states over accuracy.

If you're thinking about buying a home or refinancing - even if you've got excellent credit - you may want to avail yourself of a forthcoming free service that could help you get a better mortgage rate. Under the terms of a national class action settlement, you may qualify for six or nine months of daily monitoring of your credit file plus unrestricted access to your credit report and score. To be eligible, you need to have had any form of open credit account - a charge card, student loan, auto loan or a mortgage - at any time between Jan. 1, 1987, and this past May 28. An estimated 160 million American consumers can meet that criterion, though eligibility expires Sept.

A lawyer for Lt. Gov. Michael S. Steele said yesterday that Steele is considering whether he will sue a former staffer for the Democratic Senatorial Campaign Committee and possibly the committee itself if additional questions are not answered this week about the employee's efforts to obtain his credit report. E. Mark Braden, who is representing Steele and worked as counsel to the Republican National Committee during the 1980s, said he wants to know whether Lauren B. Weiner, who is expected to plead guilty to a misdemeanor tomorrow in federal court, shared the information she found with her Democratic colleagues or others.

After news that Democratic Senatorial Campaign Committee researchers reviewed Lt. Gov. Michael S. Steele's credit report, five GOP senators yesterday asked for assurances from that group's head, Sen. Charles E. Schumer of New York, that committee staffers hadn't accessed their personal credit information. A spokesman for the group, which helps Democratic senatorial candidates nationwide, said last week that the researchers had not obtained any other credit reports. But the Republican senators, all of whom face re-election next year, wrote that "the security of our families' finances is too important to rely on the assurances of professional political staff and consultants whose primary focus is defeating us next November."

With 2011 winding down, there's still time for some smart moves to keep your finances in order. Here are some tips that will help you in 2011 and next year: Make charitable donations. Make a donation today by credit card and you'll get the deduction on your 2011 tax return, but won't have to pay the bill until 2012. Clean out closets. Donate gently used clothes and goods for a tax deduction. Goodwill Industries of the Chesapeake is taking donations today from 9 a.m. to 4 p.m. Contribute to college savings plan.

Marlene Partridge and her husband have a six-figure retirement income, no debt and pay off their credit cards each month. Yet when the 62-year-old former teacher from Idaho saw her credit score a couple of years ago, she was disappointed that it wasn't near perfect. "Are the very best credit scores reserved only for the extremely wealthy?" she asked recently in an email. It's a question that often crosses consumers' minds, particularly the most careful users of credit.

Breaking up with a bank can be hard to do — and expensive if you don't do it right. Patsy Pahr of Towson says the mark left on her credit when she tried to close her Capital One credit card years ago came back recently to threaten her business license. And Norman Chase, a retired filbert farmer in Oregon, discovered that leaving $3.21 in an unused checking account led to a debt collector pursuing him for hundreds of dollars. Ending a relationship with a bank takes a little more work than starting one up. Both sides bear responsibility, but consumers should be extra vigilant.

While congressional leaders work to push through a deal to raise the government's debt ceiling, some credit unions that serve federal employees aren't taking any chances. Institutions in Maryland and Washington have developed programs to assist their members in the event Congress fails to raise the government's borrowing limit and Uncle Sam can't pay workers' wages or retirees' benefits this month. They are prepared to offer low-rate or interest-free loans and allow borrowers to skip some loan payments to get through the financial crisis.

When an adult's identity is stolen, he or she often discovers the theft in a month or so, when the next financial statement comes in. But when it's a child who is being ripped off, it can be many years before the fraud is discovered. "Parents have no idea that their children's identities have been stolen until they have become adults and find that their credit report says they are in debt," said Steven Toporoff, an attorney with the Federal Trade Commission's division of privacy and identity protection.

Less than 12 hours after the confetti dropped on Maryland's 2011 legislative session, Gov. Martin O'Malley signed legislation Tuesday morning to limit access to credit reports, allow police to use wiretaps to investigate human trafficking and to prepare the state for the federal health care overhaul. In the first signing ceremony of the year, O'Malley endorsed about a quarter of the 707 bills passed by the General Assembly during the 90-day session that ended Monday. Not on his desk Tuesday was legislation to extend in-state tuition rates to illegal immigrants or to raise the sales tax on beer, wine and liquor from 6 percent to 9 percent.

ANYONE who has bought a home or applied for a mortgage knows this hard financial reality: What is in your credit report can cost you thousands of dollars in extra loan charges or can save you thousands. Lenders base their rate quotes to you on your credit score, which is nothing more than your credit file run through an electronic risk-prediction grid. If the information is erroneous, and your scores are depressed, that's your problem. You need to get the bad stuff in your files corrected or deleted before you apply for a mortgage.

MEMO TO THE thousands of people who've struggled to fix an error on their credit reports: A new set of amendments to the Fair Credit Reporting Act (FCRA) will take effect 11 months from now. They'll expand your rights and make it easier to enforce the rules.The credit bureaus have already put many of these reforms into force. Some were adopted on a voluntary basis. Others were instituted at gunpoint, after the states or the Federal Trade Commission accused the bureaus of violating the law."

Although proponents of the new Maryland law that would ban employers from using credit scores to determine employment eligibility make some important points, the ban goes too far ("Md. lawmakers want to limit credit checks on job seekers," March 20). Banning altogether the use of credit scores in the hiring process takes out of the hands of employers something that can be an insightful tool. Credit scores, after all, contain useful information that can be relevant to performance on some jobs.

Robert Robinson wanted to be a security guard. Easter Morris tried becoming a cleaning lady. Kyla Whiting sought work at a handbag outlet store. All say they were denied jobs because their would-be employers learned that they had bad credit. In response to such stories, state lawmakers now are moving to limit the ability of businesses to run credit checks on job applicants. "A credit report should not be the measure by which people are judged in terms of whether they can do a good job or not," said Sen. Catherine E. Pugh.