Many sites offer consumers a free credit report online. On the surface, taking advantage of the freebie sounds like a good idea—but more often than not, it’s an offer you should ignore.
When Free Becomes Costly
If you’ve ever tried to respond to an offer to get a free online credit report, you may have wondered why the company offering the report was asking for your credit card number on their request form. Sure, they aren’t going to charge the card right now, for this report—but they may next month. And the month after. Many companies only offer a free report to entice you to sign up for a service that checks your credit report every month. And that service cost can really add up. You may be able to cancel these product and service add-ons, but often that is a difficult process that can result in erroneous charges you never get removed.
While it is a good idea to check your credit report a few times a year, only in rare instances will you need to check it monthly. Further, instead of going through a third-party service to get regular reports and credit score monitoring, you can go directly through the credit reporting agencies (Equifax, TransUnion and Experian).
A Free Credit Report Online May Not Be Accurate
The Wall Street Journal found that many online sites (which are not tied to the reporting agencies) had discrepancies in the credit score they provided with the free credit report because their models for evaluating credit score differed from FICO’s.
If you want to really understand what your score is, it’s best to go through a reporting agency that provides a true FICO score.
The Information May Be Vague
In order to protect your data, many companies offering free credit reports hide account numbers and other important information that would normally appear on a credit report. This could mean that if you have a question or find an inaccuracy, you’ll have to get a second report from one of the credit reporting agencies that has more data. Instead, it’s probably a good idea just to start there.
Consumers can get a free copy of their credit report from the credit reporting agencies each year. Simply go to ConsumerFinance.gov. Remember too that if you apply for credit and are denied, the denial notification will include information about getting a free copy of your report so you can understand the reasons you were declined.