Unemployed? You Can Get an Extra Free Credit Report

Here's one benefit for the unemployed that Congress isn't about to cut off: If you're out of work, you can get an additional free credit report each year.

Federal law requires that all U.S. consumers be granted free access to their credit reports once every 12 months. Unemployed workers, however, are entitled to an extra report during their job searches. Those reports can have a serious impact on consumers' financial lives: Because employers frequently use credit reports in their hiring decisions, consumers who review those reports -- and take action based on the information they contain -- can improve their chances of getting hired.

Unfortunately, consumers often fail to exercise that right, according to experts. "Most people who are unemployed are unaware that they are eligible to receive a free credit report," says Olivia Almagro, public information officer with the South Florida Workforce Investment Board in Miami. Why? Because while ad campaigns have informed people of their right to one free credit report per year from each of the three credit bureaus, little is said or done to let the jobless know of their extra right.

The benefits to the unemployedUnder the Fair Credit Reporting Act, each of the three major U.S. credit bureaus -- Equifax, Experian and TransUnion -- must provide all consumers with a free credit report each year. And they do -- online, through AnnualCreditReport.com, which they jointly sponsor. The act also enables out-of-work individuals to get an additional credit report at no cost, provided those consumers plan to look for a job within 60 days. Unemployed workers have had that right since 1996.

It's a right worth exercising. "Unemployed consumers may want to check their credit reports when applying for jobs because employers may ask to perform a background check, which could include credit report information," says Rebecca Kuehn, assistant director with the FTC's division of privacy and identity protection. Although some consumer advocates and lawmakers argue that such credit checks are an unfair barrier to employment, they continue to be permitted in most states. "It is important to know what is in your report and, if there are errors, take steps to get them corrected," Kuehn says. Otherwise, those damaging errors, left untreated, could potentially keep an applicant from getting hired.

Credit reports can also encourage better budgeting. A consumer can use that report to figure out what debts remain outstanding and whether any accounts are in collections, says Natalie Pankow, a credit adviser with the Jewish Vocational Service in Chicago. That can help with prioritizing repayments. "During unemployment, when income is tight and/or uncertain, learning to prioritize payments, reduce spending, stretch unemployment checks and get access to other nonprofit agencies is paramount," Pankow says in an e-mail.

Getting free credit reportsIn spite of the benefits, requesting these reports isn't so straightforward. Compared with the centralized AnnualCreditReport.com website and phone number, unemployed workers will find the process of getting a free report is "definitely not one that's set to a standard format," the FTC's Kuehn says.

An unemployed consumer who wants a free report must contact the bureaus directly. The request process varies:

  • Experian says the unemployed can visit its website, call (866) 200-6020 or write a letter to the bureau certifying they are jobless. The letter should include: the consumer's full name (including middle initial and suffix such as Sr., Jr. or III), current mailing address, Social Security number, date of birth, previous addresses for the past five years and two proofs of the consumer's current mailing address, such as driver's license, utility bill, bank or insurance statement. The information should be mailed to: P.O. Box 9530, Allen, TX 75013. The bureau says once it gets that information, the consumer can expect a report within 10 business days.
  • TransUnion offers a link on its website for consumers seeking a free TransUnion credit report, including for the unemployed. They can also call (800) 888-4213 or mail a form to TransUnion LLC, P.O. Box 1000, Chester, PA 19022.
  • Equifax says consumers can go online or call (800) 685-1111. Additionally, they can write to Equifax Information Services LLC, P.O. Box 740241, Atlanta, GA 30374.

Better publicity neededConsumers' right to a free credit report has been well publicized, including a national advertising campaign for AnnualCreditReport.com, but there hasn't been a similar effort targeting the jobless. In fact, a Google search indicates the AnnualCreditReport.com website makes no mention of the reports for the unemployed.

At the local level, certain state agencies acknowledge they aren't doing much to inform their residents. The Illinois Department of Employment Security, for example, doesn't say anything to unemployed workers about requesting their free reports. "I don't think it's anything that's been given a lot of thought to," says IDES spokesman Greg Rivara. Meanwhile, California's Employment Development Department says although its program doesn't provide that information, the state's Department of Consumer Affairs does mention the free credit reports on its website. Florida's Agency for Workforce Innovation, which administers the state's unemployment compensation, doesn't have a formal procedure for letting unemployed workers know about the free reports. However, "when unemployment compensation customers or workforce services customers have direct interaction with agency staff, this type of information may be shared," says Robby Cunningham, the agency's communications director.

The FTC says it wants more unemployed consumers to be aware of the free reports. "We like to make sure consumers know what rights they do have," the FTC's Kuehn says. That's something the FTC says it could explore with states.

"The more opportunities for people to know what rights they do have, they better off they will be."

More from CreditCards.com: