Wednesday, June 24, 2009

The $180 Free Credit Report


Taking control of your credit is more important than ever. Your credit rating factors into everything from buying a home to finding a job and the credit reporting agencies are looking to capitalize on this new found awareness. Using tactics ranging from fear to catchy jingles, ads touting seemingly “free” credit reports play in heavy rotation on TV and radio. But these “free” reports often come with more strings than a marionette, so a savvy consumer needs to know their options before they end up with services they did not need or intend to buy.
The free credit reports you see advertised all come with automatic enrollment in subscriptions to “credit monitoring” services. These services cost $14.95 a month—for a total of $180 per year—and will continue indefinitely until you cancel.

The value of these credit monitoring services is limited at best. By ordering and reviewing your credit report you are already monitoring your credit, effectively negating the value of the service. And these services can induce a false sense of security leading consumers to think they are fully protected from identity theft. In actuality, these credit monitoring services cannot ensure that your identity won’t be compromised, have limited benefits and come with enough loopholes in the fine print to make a contracts attorney glaze over. Save yourself the expense and the hassle and take matters into your own hands.

Every consumer is entitled to a free annual credit report from the 3 primary credit reporting agencies: Experian, Equifax and TransUnion. These reports are excellent sources for finding discrepancies in your credit history and spotting incidents of identity fraud, but do not come with the much hyped FICO score. Knowing your FICO score will give you an idea of the type of credit you may qualify for, no more, no less. Individual credit reports including your FICO score can be purchased for a one-time charge of $15—which still saves you $165/year if you make this an annual habit. If you’re looking to make a major purchase, such as a home or car, you may want to know your FICO score before approaching a lender. Otherwise, you need to consider whether this information is necessary, if your primary goal is to ensure your credit report is accurate and free from irregularities.

It’s to your credit to protect your credit. Just make sure you’re protecting your wallet at the same time.