Many people I talk to have heard about getting their FREE credit report at www.freecreditreport.com because they have heard the catchy commercials they have singing about getting their free report. The advertising is exactly correct; you can get a free credit report from their site IF you sign up for their Triple Advantage Credit Monitoring. So how much does that cost? The monitoring is free for 7 days, but after that is $14.95/mo until you cancel it. After you complete the initial form online to get started, the next form requests the necessary info to run a credit report and gather your credit card for future billing. Here is the statement explaining the cost of the monitoring:
When you order your free report here, you will begin your free trial membership in Triple AdvantageSM Credit Monitoring. If you don’t cancel your membership within 9 days of enrollment, the card entered above will be charged $14.95 for each month that you continue your membership. If you are not satisfied, you can cancel at any time to discontinue the membership and stop the monthly billing; however, you will not be eligible for a pro-rated refund of your current month’s paid membership fee.”
That stinks, huh? All this advertising for a free credit report just to find out you have to sign up for a service to get your report. There is another method to getting a free credit report though! AnnualCreditReport.com offers a completely free method to run your credit report online.
Annual Credit Report
The site is sponsored by the big 3 credit bureaus, Equifax, Experian and TransUnion. The reason this site exists, is to allow consumers to understand what is on their credit report. The Federal Trade Commission, according to the Fair Credit Reporting Act, states:
each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — to provide you with a free copy of your credit report, at your request, once every 12 months.
The problem is that most consumers are unaware of this requirement, and therefore go to sites like FreeCreditReport.com to get their report. For more details on the Fair Credit Reporting Act on the FTC website check out this consumer information page: http://www.ftc.gov/bcp/menus/consumer/credit/rights.shtm.
Other Credit Report Sites
FreeCreditReport.com is a site created by one of the big three credit bureaus – Experian
TrueCredit.com is a very similar site offering a free credit report with monthly monitoring at a cost of $14.95 per month and is created by TransUnion, another one of the big three credit bureaus.
Equifax, the last of the big three, also has a similar offer, but for a little less cost at a monthly charge of $14.95 at their main website, Equifax.com.
Why Would You Pay?
There are a couple of reasons consumers may be interested in paying for the credit monitoring through these sites to gain their credit report. First, the reports you obtain through AnnualCreditReport.com do not have a credit score, although you can pay a little extra to get one. All three of the credit bureaus credit reports do provide a score. Second, identity theft is the fastest rising crime in the United States and people want to be aware of any changes to their credit report. The credit monitoring provides them that information.
Mortgage Companies Have a Different Score?
It is possible that the consumer score you receive varies from the mortgage score your mortgage lender obtains. This excerpt comes directly from the Fair Credit Reporting Act and explains there may be a variance:
(f) Disclosure of Credit Scores
(1) In general. Upon the request of a consumer for a credit score, a consumer
reporting agency shall supply to the consumer a statement indicating that the
July 30, 2004 41
information and credit scoring model may be different than the credit score that
may be used by the lender, and a notice which shall include–
(A) the current credit score of the consumer or the most recent credit score of
the consumer that was previously calculated by the credit reporting agency
for a purpose related to the extension of credit;
(B) the range of possible credit scores under the model used;
(C) all of the key factors that adversely affected the credit score of the
consumer in the model used, the total number of which shall not exceed 4,
subject to paragraph (9);
(D) the date on which the credit score was created; and
(E) the name of the person or entity that provided the credit score or credit file
upon which the credit score was created.
Based on this, the credit bureaus provide an educational score to explain the criteria used when calculating a score. The educational score does not match the mortgage score the mortgage loan officer will get when they pull your credit. The score that the consumer receives should be used as a general idea of what the score will be from your mortgage lender, but not the actual score being used for qualifications or determining the interest rate. Typically, from my experience the scores consumers receive are lower compared to the scores I pull through the mortgage credit reports.
If you have any comments or questions please email me.
Lending a Hand,