The Truth About Free Credit Reports
By: Pat Hicks
Too many people are being confused, mislead and
taken advantage of by tem, "Free Credit Report". We
set the record straight so that won't happen. Text
How many of us have looked at anything offered to us
for "free"? Not me? Of course I have. In this day in
age when gas prices are listed as "Arm" and "Leg",
providing health insurance for your family costs
more than some mortgage payments and the cost of
raising kids looks like a hockey stick pasted onto a
graph, you bet I look at offers to save money.
Therein lie's the problem. It seems like the vast
majority of American consumers are desperate to cut
costs, any costs, and will jump too soon at offers
promising to do just that. Sometimes when you
combine a cost cutting mentality with the importance
of credit, not only to purchase the big ticket items
important to us, but more and more to simply survive
in this economy, desperation happens. Unfortunately,
the marketers know this too. So, without a little
education anyone can get confused and the likelihood
of being taken advantage of increases significantly.
The good news is that just a little education will
save you plenty.
Take for example, the term "Free Credit Report". It
now ranks right up there with the ubiquitous, "new"
and "improved". "Free Credit Report" has become part
of that lexicon of advertising buzz words that are
absolutely meaningless to me. But for many, there is
much confusion over this term. Why? I think mainly
because it has been announced that federal law
dictates we are all entitled to a free credit report
on the front page of all the newspapers.
We know everyone wants a free credit report, which
is why we started our site. People naturally want
something that is mandated by law to be at no cost,
is front page news and is so incredibly important to
each of us if we want to purchase just about
anything. We know people want their free credit
report and because most all of us work so hard for
our money, we think people deserve hearing the truth
about the subject. That is why we even put a section
on our page entitled, "The Truth About Free Credit
Reports".
So, is it not true? Yes, it is true, it's just that
the devil is in the details and the resulting
confusion has been a bonanza for those seeking to
cash in on the confusion. In fact, each of us in the
good ole U. S. of A. is entitled to a free credit
report. But, how do you get it? Where do you get it?
Who is giving it to you? Why is it being offered for
free? And most importantly, who cannot offer you one
for free?
Who cannot offer a free credit report? Let's start
with the last one first because it shines a lot of
light on the rest of the questions. Any company, web
site or service that is in business for a profit and
is not named Experian, Trans Union or Equifax is not
able to provide anyone at any time with anything
remotely resembling a credit report free of cost.
Period. End of story. Got that? Further, there is
one place set up on the web to get free copies of
credit reports at no cost and it is:
www.annualcreditreport.com . We'll talk more about
this site a little later but, other wise, caveat
emptor, let the buyer beware.
How then are these offers being made? Look closely,
the "Free" report is usually offered initially upon
signing up for a service that charges your credit
card each month for monitoring your credit. If you
cancel the service just in the nick of time, before
the charge is made to your card, you will get it at
no cost. What a hassle! And the bet is you will wake
up at least one, if not a couple or more months
later with several charges to your card. You think
these guys make foolish bets?!
Then what caused a free credit report to be offered
on the front page of newspapers, who is providing
them and how and where do I get one? Due to the
importance of consumer credit history, identity
theft and complaints from consumer rights groups
about having to purchase a credit report in order to
gain knowledge about the contents shown on
individual consumer reports, even if it was reported
inaccurately, a change was mandated.
The Fair and Accurate Consumer Trade Act (FACTA), a
revision of the Fair Credit Reporting Act, provided
for one credit report free of charge from the
reporting agencies (Experian, Trans Union and
Equifax) every twelve months, if and only if, you
haven't received a credit report in the previous
twelve months. The consumer, by either mailing a
written request to the three major credit reporting
agencies or going to www.annualcreditreport.com one
can obtain the free report if they meet the
criteria. This program was and is being phased in to
sections of the U.S. by the credit reporting
agencies starting in the western states, with the
northeastern states at the time of this writing
still to come.
However, Pamela Yip of The Dallas Morning News
writes that even this has not been without its
problems.
"The Federal Trade Commission said Experian
Information Solutions Inc., one of the three major
credit bureaus, settled complaints that it
"deceptively marketed 'free credit reports' by not
adequately disclosing that consumers automatically
would be signed up for a credit report monitoring
service and charged $79.95 if they didn't cancel
within 30 days... . With the help of the Federal
Trade Commission, the bureaus established
www.annualcreditreport.com as the only authorized
online source for consumers to get a free report
under federal law.
While many consumers haven't had any problem getting
their reports, others say they've been hit with
sales pitches for products and services from the
credit bureaus or were diverted to imposter sites.
The FTC said the company led consumers to its
www.freecredit report.com and www.consumer info.com
Web sites. Radio, TV, e-mail and Web ads promised
free reports and "a bonus - free trials of a
credit-monitoring service."
The FTC said consumers "were assured that: 'Your
card will not be charged during the free trial
period. However, valid credit card information is
required to establish your account.' "
What the Web sites didn't adequately disclose is
that consumers would be charged the $79.95 annual
fee if they didn't cancel within 30 days, the FTC
said.
"ConsumerInfo billed the credit cards that it had
told consumers were 'required only to establish your
account,' and, in some cases, automatically renewed
memberships by rebilling consumers without notice,"
the agency said.
As part of the settlement, the FTC required
ConsumerInfo.com, an Experian company, to "give up
$950,000 in ill-gotten gains."
Experian also has agreed to provide refunds to
consumers who purchased credit-monitoring products
and ordered a free credit report between Nov. 1,
2000, and Sept. 15, 2003.
"It's unfair and deceptive to promise consumers
something for free and then trick them into paying
for products they didn't want in the first place,"
said Lydia Parnes, director of the FTC's Bureau of
Consumer Protection.
"It wasn't an attempt to mislead at all," said Peg
Smith, an Experian executive vice president. "We
absolutely deny any wrongdoing." She does
acknowledge that consumers may have been confused.
"To the effect that our product offering has caused
that confusion, we certainly regret that," Ms. Smith
said. "We encourage consumers to read the language
in any disclosure on any Web site, including our
own."
The FTC also requires
www.ConsumerInfo.com to state clearly that its
free credit report offer isn't related to the
federal program."
http://nl.newsbank.com/nl-search/we/Archives?p_action=list&p_topdoc=21
The reality is that no one credit report or
combination of three credit reports by and of
themselves is sufficient to educate oneself about
where you stand as a consumer in the eyes of a
lender. Imagine a high speed race boat zooming
across a lake at top speed without a steering wheel.
Where it is going is a complete mystery but one
thing is for sure, it will crash and crash quickly
unless you get control. That's right, you. Because
without your credit scores and the knowledge about
what they mean, how they were calculated or how a
lender views them, you are headed for a crash.
No bank, credit card issuer, mortgage company,
retail store or any other credit provider will grant
you any item, service or product without looking
almost exclusively at your credit scores and the
average person has no idea what their scores are and
even if they did, many if not most, wouldn't know
what they mean.
For example, most people don't even know that
repeated "pulling" of your credit reports by
potential credit grantors lowers your scores by as
much as four points per "pull". You start "shopping"
around for the best rate on a credit card by
allowing each credit issuer to run a credit report
on you and your score will take a dive. The
difference between a 699 score and a 700 represents
thousands and thousands of dollars in interest.
Often, credit issuers don't make it perfectly clear
that your credit history is being accessed when you
respond to their offer for a new card over the
phone. The call center sales representative also
doesn't explain and state clearly to you, that your
credit history will show an "official inquiry" which
counts against your scores whether you are accepted
or rejected.
Most people don't know that a maxed out credit card
lowers their scores even if they pay on time every
month. Many don't know until it is too late that one
late payment on one credit card will cause the
interest rate charged to skyrocket not only on that
card but any other cards that have a balance! Most
also don't know that a credit card balance showing
less than thirty per cent of the available balance
improves the score. Most don't know that in
calculating credit scores, your payment history
counts as 35% of the score, amounts owed count 30%
of the score, length of your credit history counts
15% of the score, new credit is 10% of the score and
types of credit in use is 10%.
What is the truth about free credit reports? The
truth, is that consumers need to read the fine print
very, very carefully and get educated. The truth
about credit reports in general is that only part of
the story is being told by one. The truth, is that
knowledge is power and without it your money is
being taken from you, your buying power and
therefore your future is being dictated to you
rather than by you and that the cost of everything
including insurance is based on your scores.
If asked for my advice to the average consumer?
Worry less about getting a "free" report and more
about the real cost of being ignorant regarding
credit. Worry more about the immediate and long term
costs of not taking control of what is reported on
your credit report both the correct and incorrect.
Gain some credit knowledge. It is easy to do and
will literally save you a fortune. One thing is
absolutely for sure, your money and future and your
children's future will be severely impacted by your
credit. How, is up to you.
Author Bio
Pat Hicks is the Managing Partner for
www.Iwantafreecreditreport.com , a web site
providing online shopping, reviews of and links to
some of the top web based credit reporting sites. A
statement regarding the truth about free credit
reports is found there as well as the link to
www.annualcreditreport.com .
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