Over the holidays, Robin Cole gave each of his family members what some might consider an unusual gift -- a service that informs them instantaneously through e-mail every time anyone checks their credit report.

"Make a list of what you value the most. Your privacy, your reputation, your personal honor," said Cole, a Cape Girardeau businessman who owns Copi-Rite Inc. "Your credit should be among those things. Your credit is part of your reputation."

Now, with a law that takes effect in Missouri this month, it will be much easier to safeguard that credit reputation. A law approved by Congress in 2003 allows all Americans to one free credit report a year from each of the three major credit bureaus -- Experian, TransUnion and Equifax.

The law is being phased in during a nine-month period across the United States and took effect in Midwestern states, including Missouri, on March 1. It's a move that consumer advocates applaud and are using to remind people how important it is to stay informed about their credit reports -- not only for financial reasons, but also to protect themselves against identity theft.

Crucial information

The reports -- and the composite credit score that they create -- affect every aspect of people's lives, said Patricia Soileau, a certified credit counselor with Consumer Credit Counseling in Cape Girardeau.

"Those numbers are very, very important," she said. "It's what they use when you apply for a loan, when you apply for a credit card, when you buy a house. More and more employers are even looking at your credit before they hire you. It's crucial to stay on top of that information."

A credit report contains information on where you live, how you pay your bills, whether you've been sued or arrested, and whether you have filed for bankruptcy, said Jen Schwartzman, a spokeswoman for the Federal Trade Commission, which enforces the new credit report law.

The three credit bureaus sell the information in those reports to creditors, insurers, employers and other businesses that use it to evaluate applications for credit, insurance, employment or renting a home, she said.

The three companies have set up one central Web site, a toll-free number and a mailing address where people can get their free annual report. Schwartzman said to not contact the individual companies about getting their free report. They are only providing free reports through the Web site, phone number and by mail.

Schwartzman said that people can get one report from each company once every 12 months. Those can be obtained at the same time or they can be staggered over the 12 months.

Free reports can also be obtained when a person is denied credit or if they are a victim of identity theft, she said.

To get your credit score, however, will still cost you. The three bureaus charge anywhere from $6.95 to $9 for a copy of your credit score, she said.

Credit scores are three-digit numbers derived from complex mathematical formulas. Lenders use your credit score to determine whether you're a good credit risk. The most widely used credit score is the FICO score, which ranges from 300 to a high of 850.

Generally, the higher your score, the better interest rate you will get on a loan. Low credit scores can raise your insurance rates or cause insurers to drop coverage.

'We use them every time'

Locally, bankers and those in other financial sectors say that people probably don't realize how important those reports and scores are.

"We use them every time we make a credit decision," said Danny Essner, executive vice president of Capaha Bank in Cape Girardeau. "Like anything else, some people follow that information and some don't."

Essner cautioned against activity that would hurt your report and score, including a high number of inquiries. He said that any time a credit report is pulled by somebody, it brings the credit score down.

"The reason for that is, it's indicative of a consumer who has a large appetite for debt," he said. "They're probably somebody who is out there pursuing additional credit cards and loans."

But Essner said he thinks getting credit reports on a regular basis is a good idea.

"Once your credit is damaged, it's difficult to fix," he said.

Indeed, some estimate that up to 35 percent of credit reports have inaccurate information on them. If you find there is incorrect data, you must tell the reporting company, in writing, what information you think is inaccurate, according to Schwartzman.

The credit bureau must investigate the items in question, usually within 30 days, unless they consider the dispute frivolous, she said. They also must forward all the relevant data about the inaccuracy to the organization that provided the information. The company that provided the information -- maybe a credit card company or bank -- then must investigate. If it turns out you are right, the information provider must contact all three nationwide consumer reporting companies so they can correct that information in your file.

"It is just so important that these reports are right," Schwartzman said.

smoyers@semissourian.com

335-6611, extension 137