At some point or another, each one of us has
encountered an ad claiming: "Free credit report". 99% of time, there
is nothing free at the other side of link. The FTC actually requires the big 3
credit agencies to provide a free credit report each year. But they have all
managed to bury it so deep in their websites that its literally a treasure hunt
to find the right website. If after having done all of that, you manage to get
hold of your credit report, you would be then disappointed to know that your
credit score is no where to be seen. Welcome to the world of subterfuge involving
dishonest practices by companies and websites where they are all out to rip you
off of your money to get something that they owe it you for free.
Lets start with a fun exercise. Someone told
you, "Hey, you don't have to pay for your credit report. You can get it
for free. The FTC mandates it". You go ahead excitedly and search for
'Free credit report'. Here's a screenshot of what you would see. Now tell me
amongst all the results (sponsored & otherwise) which ones are actually
free. Hint: There is only one
Here's the right answer:
AnnualCreditReport.com is the only website
that is mandated by the FTC to provide you with direct links to the free credit
reports that the big 3 credit agencies are required to give you each year. Stay
away from everything else! Now once you get that, there are a few things to
take care of. Again, keep in mind that the big 3 credit agencies are
reluctantly giving you the free credit report that they are mandated to provide
each year.
You can start off by selecting any of the 3, but
before you do that you have to go through an ID verification process where you
will be asked a few questions about your background to make sure that you are
who you claim to be. Now an ideal strategy would be pick one of the 3 credit
reports at any point of time, say for e.g. we start with Transunion and then
pick Experian after 4 months and Equifax after 8. Then by the time you wind up
12 months, you can go back and get your Transunion report again. This way you
are able to monitor your credit history every 4 months (which is a bit too long
of a gap, in my opinion, but there are other solutions to cover for
that).
Another thing to keep in mind when you go and
open up your credit report is to IGNORE any and all links that offer you to
reveal your current credit score. None of them are free and even worse, they
will take you away from you Credit Report, with no way to get back. So the
first step is to save the report. Now the best way to do it is do Ctrl+A (Cmd+A
in case of a mac) and then copy and paste it in a word doc or just into you
webmail and mail it to yourself. Once you've done that, you can then look
through your report without fear of timing out. Now, how to read and understand
your credit report is a whole different topic and we'll cover it next time.
In the meanwhile, keep in mind, that your credit
scores have nothing to do with your credit report. A company called Fair Isaac
Corporation, better known as FICO, provides credit scores. And its kind of
difficult to get a proper FICO score for free. In any case, what most of the
credit agencies provide is their own version of the FICO score and you've to
pay for it. Not worth it, in my opinion. Because you can get those same scores
for free from 2 awesome websites: Creditkarma.com and Creditsesame.com.
They both will provide you with a credit score - Transunion score and Experian
score respectively. And they are well and truly free, no strings attached. They
both operate on the Mint.com business model, where they'll try to sell you
financial products like credit cards, savings accounts, IRAs, insurance and
other such services based on your credit score (anonymized, of course). If you
do don't need any of the other services you can steer clear of them and get
your score for free literally everyday if you want.
