'Free' doesn't always mean free when it comes to credit reports
FARGO - The Federal Trade Commission's amendment to the Free Credit Reports Rule requires much clearer disclosures in ads for "free" credit reports. "This provision is needed because some credit reporting agencies and other companies have taken a...
FARGO - The Federal Trade Commission's amendment to the Free Credit Reports Rule requires much clearer disclosures in ads for "free" credit reports.
"This provision is needed because some credit reporting agencies and other companies have taken advantage of the awareness of 'free' credit reports, and consumers have been confused and misled about where to get a free credit report," says North Dakota State University Extension Service family economics specialist Debra Pankow.
The only truly free credit report website is http://www.annualcreditreport.com . You can request one free credit report per year online from each of the three major credit bureaus: Equifax, Experian and TransUnion. You also can request your free report by phone at (877) 322-8228 or by mail at P.O. Box 105281, Atlanta, GA 30348-5281. You can request all three reports at once or one at a time.
With other Web sites, there usually is a catch. For example, at one widely advertised "free" credit report website, you can get a free credit report, but you also are enrolled in a credit monitoring service. That service costs $15 per month, and you have only seven days to opt out before you are charged fees.
"If a credit report website asks for your credit card number, this is a red flag that its services are not free," Pankow says.
The Free Credit Reports Rule amendment requires websites other than AnnualCreditReport.com that advertise free credit reports to have a disclosure at the top of every page telling consumers how to get these free credit reports. The statement must say: "This notice is required by law. Read more at FTC.GOV. You have the right to a free credit report from AnnualCreditReport.com or 877-322-8228, the only authorized source under federal law."
The amendment went into effect for print and Internet ads April 2. Disclosure wording for television and radio ads will take effect Sept. 1.
Adding to the confusion, the law requires credit bureaus to provide a free credit report to consumers, but these reports do not include their credit score, Pankow says. Some credit bureaus try to sell credit score or credit monitoring services as you order your free credit report. These promotions have led some consumers to believe they must purchase these products to get the credit reports.
Other websites claim to offer "free" credit reports, credit scores or credit monitoring, but these are not part of the legally mandated free annual credit report program. The "free" offer usually is temporary because it means "free trial." If you forget to cancel during the trial period, you automatically will roll over to the for-pay service and the company will start charging fees to your credit card. This could range from $14.95 to $29.99 a month.
The amendment also requires that credit-reporting agencies cannot advertise products and services on http://www.annualcreditreport.com until after consumers receive their free annual credit report disclosures. In addition, it restricts other practices that may interfere with the free disclosure process.
"Every consumer should take advantage of these free credit reports," Pankow says. "It helps you know what your creditors see about you and uncover any suspicious activity. If there are mistakes, you can straighten them out."
She also advises you to stagger your requests for the free report every four months so you can monitor your credit throughout the year.
If you have paid for what you thought was a free credit report, you can file a complaint at http://www.ftccomplaintassistant.gov/ . For more information about the amendment, visit http://ftc.gov/opa/2010/02/facta.shtm .
Pankow suggests you also visit http://www.lowcards.com , which is a website that simplifies the confusion of shopping for credit cards. It is a free, independent website that helps consumers easily compare credit cards in a variety of categories such as lowest rates, rewards, rebates, balance transfers and lowest introductory rates. It also gives an unbiased ranking and review for each card.