Since 2003, credit bureaus have been required by law to provide Americans with annual access to their credit reports, at no charge. However, the AnnualCreditReport.com web site created to manage the process has been overshadowed by a variety of services claiming to offer free insight into credit health. Many of the trial offers attached to free credit report services require consumers to leave a credit card number that can later be charged for credit monitoring services, magazines, or other recurring subscriptions.
It's a classic marketing tactic, and for consumers looking to buy a home or an automobile, advanced credit information subscriptions can be helpful. Legitimate marketers also make it easy to cancel subscriptions and to request refunds for services ordered in error. The growing number of poor user experiences and outright scams associated with requesting free credit reports forced lawmakers to respond to consumer complaints. New rules taking effect April 2, 2010 include:
- Web sites offering free credit reports must prominently disclose the fact that consumers are entitled to an annual report by accessing the industry's official Web site or by calling a special toll-free number.
- Web sites offering free credit reports must provide clickable links to the Federal Trade Commission and to AnnualCreditReport.com.
- All three credit bureaus participating in the AnnualCreditReport.com Web site must delay any advertising or paid upgrade opportunities until after a consumer has completed his or her information request.
- The Federal Trade Commission reserves the ability to end or to modify marketing practices that it deems confusing or misleading to consumers.
By September 1, 2010, marketers advertising free credit reporting services on television and radio must include prominent disclosures about trial offers while referring potential customers to the AnnualCreditReport.com Web site and toll free number.
Credit Scoring, Monitoring Services Not Included Under FACTA
The Fair and Accurate Credit Transactions Act granted Americans free access to credit reports, but does not include many of the most popular tracking and analysis tools offered by credit bureaus. For example, the FICO credit score has become one of the most popular methods for Americans to measure their financial health. FICO's algorithms, like those used by other credit scoring companies, convert raw data from credit reports into a numeric indicator. You can access that raw data under FACTA, but you must still pay to see your credit score.
Likewise, consumers concerned about potential identity theft or reporting errors enjoy the convenience of active credit monitoring. These paid services range from simple monthly reports to automatic text messages every time a credit bureau has updated your profile. Personal finance experts often debate the usefulness of monitoring services for the general public, especially when some states now offer residents access to free credit reports more often than guaranteed under FACTA. Credit reports have become essential to more than just loan applications, impacting corporate hiring decisions and insurance premiums. If you need to make sure your credit history is error-free, an affordable access or monitoring plan can help you make necessary adjustment requests.
Taking Advantage of Free Credit Report Offers
Leveraging free trial offers wisely can get you even more access to your credit history each year, while exposing you to potentially valuable services. When evaluating a free credit report offer, keep these tips in mind:
- Remember that any site offering free credit reports, other than AnnualCreditReport.com, comes with strings attached.
- Whenever a Web site requests your credit card details, assume that a company wants you to pay an eventual subscription fee. Check the fine print for the amount and the schedule of any recurring payments. A $1 trial offer can easily turn into a monthly fee.
- Review the terms and conditions of any promotional offer for cancellation processes and penalties. Write down cancellation instructions and deadlines.
- Avoid potential fraud Web sites by dealing directly with well-known credit bureaus, credit scoring agencies, or financial institutions.
Finally, remember to use a credit card instead of debit card whenever responding to free trial offers online. Many credit reporting agencies use credit card information to speed up the process of delivering your credit report, especially if you have endured identity theft in the past. Most importantly, your credit card gives you significant protection against fraudulent or mistaken charges. You can reduce the likelihood of needing to check your credit report again later.