There’s No Such Thing As A Free Credit Report

It is a basic law of economics: there’s no such thing as a free lunch. Turns out, the same is true for most websites that promise trusting and unsuspecting users a “free” credit report. Too often, those sites are merely a lure, intended to get people to paying money out of their credit card account on a monthly basis. Once again, before you sign up for any “free” offer, make sure to read the fine print.

In 2003, US Congress enacted legislation that allows every American to examine his or her FICO credit score for free once–and no more than once–every year. It is possible to do this on the Internet, via a specially authorized website called AnnualCreditReport.com. The site contacts the three foremost credit bureaus in the US: Experian, TransUnion, and Equifax. It collates data from these agencies and delivers a free report to the user.

However, many websites have sprung up of late, which take advantage of the recent government legislation, and of consumers gullibility.

One  particularly nasty offender is a site called FreeCreditReport.com, operated by the Experian credit bureau–which, one mustn’t forget, is a for-profit company. The site advertises itself with catchy and attention-grabbing television commercials, which feature typical down-on-their-luck young people singing about their financial woes. If only these likeable 20-somethings, now forced to live in their parents’ basement, had check their credit scores for free via FreeCreditReport.com!

Unfortunately, real life does not offer such easy solutions: you should distrust all those who claim to be able to do so. Visitors to the site fill out personal information, including their credit card numbers, to receive their “free” reports. In due time, the visitors do receive their credit reports from Experian. However, by entering their credit card numbers, they also automatically become enrolled in one of Experian’s credit-monitoring services. This service charges users $14.95 a month–and most of these users have no that they have signed up for a paid service until they see their credit card statements.

Although Experian marketing officer Mike Dean justifies his company’s conduct by claiming that Experian has “always been a very aggressive marketer,” consumer interest groups are angry and concerned. Edmund Mierzwinski, of the United States Public Interest Research Group, calls FreeCreditReport.com “a protection racket.” Experian is “charging you a fee and.. making a promise that it’s going to improve your credit… but in fact it does neither,” claimed Mierzwinski.

Even the US government has criticized Experian’s misleading website and advertising campaign. The Federal Trade Commission has fought with Experian over the site back in 2005. As a result, Experian has had to pay almost $1 million to the FTC because of the misleading nature of its site and advertisements. The government agency went on to caution consumers, on its own site, about using sites other than AnnualCreditReport.com to check their credit ratings.

However, don’t wait for the government to warn you about what not to do. Don’t wait for the consumer advocacy groups. Make use of your own critical faculty in all areas of your life–but do so especially where your finances are concerned.

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