With big budget advertising, many people fall for not-free credit report scams. Here's the scoop on what's free and what's not.
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The clever ad with the guy in the beater car being laughed at for his misfortune plus the oh-so-catchy brain-sticking tune from FreeCreditReport.com probably make you think that is the place to go to get those free credit reports you hear about. It’s not the place to go. Neither are any of these Web sites:
These companies offer free credit reports when you sign up for -- buy -- credit monitoring services. Many months ago I wrote a column about credit monitoring, in which I criticized third party monitoring services because when they check your credit reports it shows up on your credit history as if there was a credit check (the same process that happens before a company will extend credit to you) and it costs you points off your credit scores. That column continues to unleash furor among readers who have used legitimate credit monitoring services sponsored by the major credit reporting agencies (CRAs) -- Equifax, Experian and TransUnion -- rather than third party services. The monitoring services offered by the CRAs can help you stay on top of changes in your credit history and improve your credit scores.
Because the misleading way these companies attract business for not-free credit reports offends me, I have been explaining how consumers can honorably work the system established by these companies. Before you try this, take your time to read the small print on the website so you are certain of what you’re doing.
Most of these sites provide you with free copies of your credit reports instantly and some offer you credit scores. You’re only interested in a FICO (Fair Isaac Corporation) score from Equifax because it is now the only CRA that sells FICO scores directly to the public. The scores sold by Experian and TransUnion are commonly referred to as FAKO scores because they are frequently inflated and these are not the scores that businesses use to decide whether to extend credit to you. Most of these not-free credit report companies offer you a 7-day or 30-day free trial period. Be careful to write down the precise instructions for what you need to do to cancel. Sometimes it’s tricky and you can’t always locate the information (easily) after you’re a customer. You can sign up for the service; get copies of your credit reports from Equifax, Experian, and TransUnion; receive your Equifax credit score; and monitor your credit activity during your free trial period.
If you want to cancel, follow their instructions precisely. Do it 48 hours prior to the expiration of your free period so you’re certain there is time for your cancellation to be processed. And follow up with a phone call to customer service, before your trial session ends, to verify that your account has been cancelled. Get the name of the person you talk with when you call. If a charge turns up on your credit card and you have followed their directions exactly, while keeping a record of your actions, your credit card company will be able to cancel the account and refund any charges.
If you’re interested in using a credit monitoring service, Next Advisor has prepared a chart comparing the most popular products. Some of the pricing seems to be different from what I found on websites, but it’s close. Because Equifax is the only CRA providing FICO scores directly to the public and their Credit Watch Gold product has an excellent reputation, that would be a wise choice for keeping tabs on your credit.
However, if you’re only looking for free credit reports, all of the commercial sites are an aggravation. The only place you can go to get your annual free credit report from all three CRAs is AnnualCreditReport.com. While you’re applying for your free credit report copies on AnnualCreditReport.com, you will be accosted by ads attempting to sell you goods and services you don’t need. It’s obnoxious and causes even the financially seasoned among us to wonder at the onslaught of appeals. The one good deal is a one-time offer of your credit score from Equifax. While your FICO scores will be different from all three CRAs because they weight aspects of your credit history differently when they calculate your credit scores, the Equifax score will give you a ballpark idea of what your FICO credit scores are.
With vigilance, you can avoid all those AnnualCreditReport.com wannabes to get your free credit reports.