When FREE does not always equal FREE

Do an online search for “free credit report” and you’ll end up with a dozen or more websites promising online credit reports (and often credit scores) for FREE. Most of these companies even have the word “free” in their name, but don’t be fooled, there’s nothing FREE about their services. Many will entice people to sign up for a product that comes with strings attached. Most will request a credit card number to enroll and then will charge you if you do not cancel the service within a specific grace period.

A recent post (July 24, 2007) on the blogsite The Red Tape Chronicles written by Bob Sullivan explains that “one site, for instance, requires enrollment in pricey credit monitoring service, which can only be canceled online after precisely 23 days. Another automatically enrolls users in a discount travel service. And some hint that the real free credit report site established by Congress -- AnnualCreditReport.com -- isn’t all it’s cracked up to be.” He goes on to say that many of these sites actually can be traced back to the credit bureaus either directly or by affiliation.

The Fair and Accurate Credit Transaction Act of 2003 made it so that consumers are entitled to a free copy of their credit report, once per year, from each of the three major credit-reporting bureaus. Those three agencies -- Equifax, Experian and TransUnion -- even set up a Web site that consumers must go to for their freebie; it's only one legitimate source where you can obtain your FREE credit reports: http://www.annualcreditreport.com/.

There are plenty of other sites with similar names promising free credit reports, but invariably they package the "free" side with some other goods and services, selling you your credit score -- which the agencies are not required to give you for free -- bundling the three reports together into one, selling credit-monitoring services and more. Consumer Reports WebWatch recently reviewed 24 sites offering "free" credit reports and found that the proliferation of these other sites -- which invariably charge a fee for bundling several services together -- was creating confusion. Worse yet, the study found that nine of the 24 reviewed sites were owned or closely tied to TransUnion, with eight others having similarly close connections to Experian. In other words, the same guys who were required by law to provide a free report are also creating some of the confusion about the freebies. That's disconcerting -- and it explains some of the confusion -- but it's not against the rules. It just forces consumers to be particularly careful to get to the right site.

Also, Consumer Reports says half of all credit reports are loaded with errors that could affect you if you're trying to get a loan, open another credit account or even rent an apartment.

Increased consumer awareness and knowledge is a good thing. It’s a positive sign that more folks are interested in what’s being reported in their credit files. Everyone should check their credit reports at least once a year to make sure that all of the information contained in them is accurate and up to date. You should also check your reports for any information that is fraudulent, which could signal that you are the victim of Identity Theft. This includes accounts as well as personal information such as addresses and phone numbers.

So, before you give over your credit card number for something that is supposed to be “free,” don’t do it.

Go to http://www.annualcreditreport.com/.