Why Do You Need a Credit Report?
Ordering a credit report may seem simple. However, many people end up being charged monthly fees long after they receive their information.
You may have cut up all your old credit cards and opted to live a credit-free existence, but realistically you will need credit, at some point, to get by. Few people take $20,000 to the car dealership to buy that brand new vehicle fully in cash. Similarly, how many people do you know that paid their entire $40,000 college tuition or $150,000 home off in cash? On a much smaller scale, your credit files are often accessed by third parties when you’re looking to take out a new credit card, open up a bank account or get a new job.
Your credit report holds the answer to the question: “Is this person creditworthy and responsible?” Wouldn’t you like to know the answer? To keep all options open to you, you will want to ensure the information contained on your visible report is accurate and up-to-date. Also, checking your credit report will reveal risky borrowing patterns you’re making, without even knowing it. At the end of the day, having a high credit score can get you the lowest interest rates on loans and save you thousands of dollars.
One last reason to get a copy of your credit report is to protect yourself from identity theft. Given the poor economic climate and high unemployment rates, there are many more people going to desperate measures to get their hands on fast cash. While your credit card statement will show any unauthorized purchases, your credit report will reveal if any new credit accounts have been opened in your name and charged up. In some cases, people have even discovered mortgages or auto loans they never took out!
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What Laws Dictate Credit Reports?
The 2003 Fair and Accurate Credit Transactions Act, an amendment to the Fair Credit Reporting Act, was passed to help prevent identity theft and ensure people have fair access to credit opportunities. By law, you are entitled to receive a free credit report from Experian, a free credit report from Equifax and a free credit report from TransUnion each year. The government has set up a website at to facilitate the issuing of these free credit reports. The law encourages you to look over your information to see that it is complete and accurate.
How Much Do Credit Reports Cost?
As previously mentioned, each individual credit report from Equifax, TransUnion and Experian is completely free. You may contact each credit bureau and order a free report at the same time or space them out intermittently throughout the year. The one caveat is that credit scores – something many Americans are interested in -- will cost you. At Experian, you can buy your Vantage score for $5.95. At Equifax, you can buy your FICO score for $9.95. TransUnion will let you view all three bureau credit scores for $9.95.
What Else Do Credit Bureaus Do?
Perhaps you’re wondering, “How do credit bureaus make money if they give out these reports for free?” Whenever a third party – be it an employer, a solicitor, a loan officer, a creditor or a collection agency – wants to access your file, they are charged a fee.
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Additionally, credit bureaus sell other services to consumers. For instance, they can monitor your account for identity theft for $14.95/month, provide identity theft insurance for as low as $14.95/month or place a free credit freeze on your account (for which you will need to pay $10 to have it lifted later on.) You may pay for monthly ongoing email alerts regarding your credit account for $14.95/month or buy a 3-in-1 credit report comparison with additional analysis for $39.95 too. Of course, the services and prices vary with each individual credit bureau, so you’ll have to visit the three credit bureau websites if you’re interested in more than just your free report.
Remember that you are not obligated to purchase anything with your free credit report. Often, the bureaus will give you a special offer (such as unlimited access to your credit report/score for 30 days or free credit monitoring for 30 days) but will begin charging you a monthly fee thereafter to maintain your privileges. It’s important that you read the fine print and check your credit card statement if you are asked to provide any information. Many people never think to look for these mysterious charges and find out when it’s much too late!