Is that Credit Report Really Free?

In September of 2005, Congress passed a law requiring the major credit bureaus to provide consumers with one credit report annually. The law also demanded that this report be available to consumers free of charge.

Since then, advertisements for "free credit reports" have sprung up everywhere: on the internet, television and radio. Some of them get your attention with catchy songs, others warn of the dire consequences that come from being unaware of a bad credit score.

When you visit most of these sites, though, the first thing you encounter is a form asking for your credit card number. Does that make any sense? Why should you have to pay for something the law says is free?

The answer is that all of the sites advertising on TV and the internet are not the "official" government site for the free credit report. Sure, they'll let you see your report...if you're willing to pay for a "credit monitoring service."

While this marketing technique isn't illegal, many consumers see it as a bait-and-switch. You're offered a free report, but you have to buy a different service in order to get the information which you're entitled to for free!

Although the government hasn't done a good job of advertising it, there is an official site to visit, where you can see your credit report without having to pay anything. This site is www.annualcreditreport.com.

When you visit this site, you're allowed to view a report from one of the three major credit bureaus: Equifax, TransUnion, and Experian. Why only one? Because that's what the law entitles you to. If you want to see your credit report from the other two bureaus, you have to pay.

Unfortunately, if you want your credit score (a number which summarizes your credit history), you'll have to pay for that, too. Congress wrote the law with the goal of helping consumers avoid identity theft. They did not plan on customers wanting to monitor their actual scores.

While the free report doesn't offer you a credit score, it does give you sufficient information so you know where you stand: you can see your open accounts, payment history, and any delinquencies. For most average consumers, this is enough information to reassure them that their identity hasn't been stolen; if you recognize all the accounts and payment histories, you're in good shape.

However, if you're checking your credit with thoughts of applying for a loan, you would do better to get the free report and pay for the score as well, since the government-mandated report only provides basic information. It seems unfair, since the law promises you a free report, but, as with all things, you only get what you pay for.

Fortunately, there are plenty of reliable sources available to get the information you need. These sites will charge you only for the report you purchase, and nothing else. Other sites have a tendency to offer "free" reports and then charge you monthly for "monitoring." Avoid these at all costs!

To get your credit report, you can buy them from the 3 major bureaus at their websites:

http://www.transunion.com
http://www.equifax.com
http://www.experian.com

To get your credit score, the easiest and most reliable site is http://www.myfico.com. This site offers the FICO credit score, which is used by most banks to determine your creditworthiness.

With these sites in mind, you can now manage your credit effectively, without falling for the dozens of marketing scams out there.