If you've resolved to get your finances in order this year, you may want to obtain your credit report and determine your credit score. Web sites offering free credit reports are heavily advertised these days, but you're probably wondering how trustworthy they are. Here is some advice on how you can safely get your credit report and credit score. We will also help you steer clear of "free" offers that could actually cost you money in the long run.
Before you sign up for a service or hand over any cash, be aware that under The Fair and Accurate Credit Transactions Act (FACT Act) you are entitled to a free annual credit report from each of the major credit bureaus -- Equifax, Experian, and TransUnion -- upon request. These three companies have set up a central government-authorized website, AnnualCreditReport.com, where you can request a credit report securely and access it immediately. You can also request your credit report by calling toll-free (1-877-322-8228) or in writing using the Annual Credit Report Request Form. If you choose either of these methods, your credit report will be mailed to you within 15 days of receipt.
You can order one, two or all three of your credit reports from each credit bureau at the same time, or you can space them out as you see fit. According to the Federal Trade Commission, "some financial advisors say staggering your requests during a 12-month period may be a good way to keep an eye on the accuracy and completeness of the information in your reports." The more you monitor your credit, the less likely you are to fall victim to identity theft without knowing it.
A free credit report does not include a free credit score. Equifax and Experian will provide your credit score for a fee of $7.95; TransUnion charges $5.95.
Don't be fooled by companies claiming to offer free credit reports; many of these services come with hidden fees and strings attached. According to CNNMoney.com, sites like CreditReport.com, FreeCreditReport.com and FreeScore.com "are not part of the government mandate and have been accused of deceptively charging consumers for unwanted services such as credit monitoring products once they sign up for their free credit report." So how do they trick you? Companies will ask for your credit card information as part of the request process, meanwhile you are unknowing subscribed to a credit monitoring service that has a monthly fee.
Over the past six years, Experian has paid over $1.25 million dollars to the FTC to settle charges that their ads were misleading. These deceptive advertising campaigns became so prolific that Congress added a measure to the Credit CARD Act of 2009. It requires companies to be more forthright in explaining their terms and conditions. They must also make it clear that their free come-on is not the free credit report consumers are entitled to by law.
Because they are lead to believe such services are mandatory protection in this day and age, many people don't bow out of the subscriptions and continue to pay. Though they may be essential for victims of identity theft who need to determine if new accounts have opened in their name, some experts say that monitoring services are unnecessary for the majority of consumers. You can monitor your own credit by keeping a close watch on your bills and checking your credit report several times a year...and that can all be done for free.