The heavily advertised “free” reports you see on television and online are NOT your free annual reports the law provides for.  Prior to Congress passing these laws, the only way consumers could get copies of their credit reports was to pay for them.  So naturally when they became available for free, the credit bureaus developed ways to capture some of their lost credit report income.  Guess who actually is behind the singing pirates and freecreditreport.com??  Yep, Experian, one of the major credit bureaus.  They even offer opportunities for you to spend money when obtaining your FREE reports!

Their are only two legitimate websites to get your free, annual reports that you are entitled to by law:  www.annualcreditreport.com and www.ftc.gov.

NOTE: The Federal Trade Commission will direct consumers to annualcreditreport.com.

When you log onto the site to get your report, you will be asked to enter personal identification information, including your Social Security number.  Make sure your computer’s security systems are updated and look up at the website address line.  It should have an https://, not just http://.  The “S” means it is a secure site.  Knowing that you initiated the contact yourself and double checking for a secure site greatly reduces the likelihood of being on a phony site.

WHAT TO DO
Your free reports are FREE.  The credit bureaus will ‘offer’ lots of different items for purchase.  These include monitoring services and scores.  And these advertised items are right up front, before you can even get to your credit report.  Just say NO.  Sometimes the button says “NO THANKS”; whatever it says, click it to save yourself some money and get to your free annual report.

NOTE: The credit scores offered by the credit bureaus are usually NOT actual FICO scores, the ones that most financial companies use.  These ‘consumer education’ scores are not an apples-to-apples comparison with what your lender sees – save your money, don’t buy them.  You can get your actual FICO scores here.   They are $16 each and include a full report; contact us for discount codes.

Remember, any time you have to give credit card information for something “FREE”, it isn’t free!  With determination and a small amount of time, you can check your own credit reports at no cost. 

We recommend checking one of your three free ones every four months; this gives you regular, periodic monitoring throughout the year.  Simply mark your calendar or planner to log on and get  your credit report.    When reviewing your credit report, look for unknown accounts, unusual or incorrect balances on your existing accounts, inquiries for new credit that you don’t recognize, extra social security numbers or names that don’t belong to you.  Click here for tips on what to do when you find errors on your reports.

We offer a Credit Analysis for only $100 that includes a review of your current credit report and provides you with strategies to positively impact and build your credit scores.  Contact us today to order yours.

Thanks, David, for a great question that led to this article!

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What isn’t as widely known is that FACTA also allows you to get copies of Specialty Reports that are made to banks, landlords, employers, and insurers.  The companies that compile these specialty reports are considered consumer reporting agencies under the FCRA; Congress has designated the companies that compile consumer reports for purposes other than credit as “nationwide specialty consumer reporting agencies”.

TYPES OF SPECIALTY REPORTS
There are several different specialty reports, including reports for:
Check Writing History
Medical Conditions
Employment Background Checks
Residential or Tenant History
Homeowner and Auto Insurance Claims

WHY CHECK SPECIALTY REPORTS
Checking all of your information stored with the consumer reporting agencies allows you to detect inaccuracies that could result in the denial of financial accounts, employment, or other items.  Inaccuracies can also indicate fraud or identity theft.

Here are some situations and recommendations for ordering your specific reports:
- Having checks fraudulently cashed on your account – order ChexSystems report.
- Employer asks to run a background check – find out which company they use and order a copy of the report.
- Applying for private health, life or disability insurance – order your Medical Information Bureau report.
- Shopping for homeowner’s or automobile insurance – order your CLUE or A-Plus claims report.

HOW TO ORDER YOUR REPORTS
There is an excellent fact sheet with details and links on how to order your specialty reports from the Privacy Rights Clearinghouse.  Keep in mind that ordering all of your reports at once can be very time-consuming.  Check the list of recommendations and determine which reports fit your current situation the most.  At the very least, you should consider getting one of the overall reports recommended in section 12.8 of the article.

There is no cost for these reports; FACTA gives consumers the right to one free file disclosure per year from each of the nationwide specialty consumer reporting agencies.  Be sure to keep track of which ones you order and include monitoring them in your annual scheduling. 
NOTE: You have the right to dispute any errors on these specialty file disclosures just as you have the right to dispute inaccuracies on your three credit reports.

SUMMARY
Your credit building plan is an important part of Personal Financial Fitness.  Being aware of ALL of the reports that contain your information and developing a system to check them on a regular basis puts you much further ahead of the game.  Contact us today for your Credit Analysis.

In the U.S. the FICO score is used by the majority of financial institutions.  It was created in the 1950s by the Fair Isaacs Corporation and ranges from 300 to 850.  Generally, the higher the score, the more financial options a consumer has.

FICO has specific formulas for different industries: mortgage, auto and consumer credit.  They have slight variations in the calculations but are all FICO scores. 

Additionally, each of the three credit bureaus has its own FICO version.

Equifax: Beacon, Beacon 5.0, Beacon 96, and Pinnacle

TransUnion: Empirica, Empirica Auto 95, Precision Score, and Precision 03

Experian: Fair Isaac Risk Score, FICO and FICO II

There are many other scoring formulas available, including the ones created by the three major credit bureaus to compete with the FICO formula.  However, they are NOT exactly the same.

NON FICO CREDIT SCORES

These consumer credit scores are not actual FICO scores:

CE – Community Empower

Credit Expert

Credit Secure from American Express 

National Risk Score

NextGen

Plus Score

Vantage Score

When you monitor your credit with your free credit reports from that you are entitled to under FACTA, the amendment to the Fair Credit Reporting Act (FCRA), you will be given the opportunity to purchase a credit score at that time. The FCRA allows the credit bureaus to charge for a credit score and they certainly want to sell you one while you are getting your free report.  These are usually NOT a true FICO score.

HOW TO GET YOUR REAL FICO SCORES

The third link at top right side of this page takes you to the Fair Isaacs website, which offers all three FICO scores with the three credit reports for under $50 in the “Credit Complete Package”.  You can save 20% until January 31, 2009 by using the discount code “FICO 2009”.

Some credit card companies and banks offer their customers access to their own FICO scores.  Check with your financial institutions to see if they offer this free service and if so, use it.  

Finally, remember that checking your own scores does NOT count against your credit rating.  It makes sense to know your scores and grow them as much as possible before you need them.  Become credit-wise to help get better credit scores and give yourself as many financial advantages as possible.

The consumer credit scores that are heavily advertised, particularly by the credit bureaus, are not necessarily FICO scores.  This means that someone who does their homework, checks their credit before going to apply for a loan and thinks they have a 700 score, may be surprised to find that their lender has a much lower score to evaluate the loan with.

The reason: the consumer went in with something other than a FICO score so the comparison is not fair; it is not apples to apples, so to speak.  When the Fair and Accurate Credit Transactions Act (FACTA) was passed in 2003 as an amendment to the Fair Credit Reporting Act (FCRA), it gave consumers the right to see their credit reports at no cost. 

However, the credit bureaus maintained the right to charge for credit scores when a consumer got their credit report.  And, most likely, there were some fees for them to pay when they used the FICO formula to give the credit score to the consumers.   In 2005, the three major credit bureaus, Experian, Equifax and TransUnion, developed the Vantage Score, which was launched in March, 2006.  It was promoted as a consistent model to be used across the three credit bureaus making it easier for consumers to understand.

It also did not require the credit bureaus to pay a fee to Fair Isaacs when they generated a score for someone; perhaps a new revenue stream for these major corporations.  Which may explain why there are now so many television advertisements for credit reports and scores.  Well, it turns out that the majority of companies still use the FICO scores.  So even though many people are checking their credit and getting their scores, it doesn’t mean they are seeing the same numbers their lender is looking at.

Everyone can get their FICO scores at http://www.myfico.com/Products/Products.aspx.  The “FICO Credit Complete” is all three credit reports and scores.  And for the month of April, they are offering 25% off all products.  The discount code is   7yrsale.  This brings the price to under $36 for all three actual FICO scores.  This is recommended for anyone who is considering a major purchase in the next year such as a home or auto loan; or a mortgage refinance, so that you can check with lenders ahead of time for the current score requirements.

NOTE: Checking your own credit does NOT count against your scores.  It will show up on your credit report as a Soft Inquiry, but is not figured in the scoring formula. 

Contact us with any questions about credit scores and credit reports.