NWA-PCUG Newsletter Article, July 2012
Avoid Scams - Get A Real Credit Report and Score for Free
By Ira Wilsker, Radio Show Host,
Columnist, College Professor and deputy sheriff
iwilsker@sbcglobal.net
(click to email author)

WEBSITES:
http://www.ftc.gov/opa/2005/08/consumerinfo.shtm
http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre34.shtm
http://credit.about.com/od/creditreportscoring/qt/freereportscam.htm
http://www.scambusters.org/freecreditreport.html
http://www.bankruptcylawnetwork.com/ftc-takes-on-freecreditreport-com/
https://www.privacyrights.org/ar/FTC-FreeCredit.htm
https://www.annualcreditreport.com
https://www.annualcreditreport.com/cra/helpfaq
https://www.annualcreditreport.com/cra/requestformfinal.pdf(Written request)
https://en.wikipedia.org/wiki/Annualcreditreport.com
http://www.bbb.org/greater-san-francisco/business-reviews/credit-services/credit-karma-in-san-francisco-ca-295805

You have undoubtedly seen countless TV and print ads for a service that alleges to give you a "free credit report", but requires a monthly or annual membership for credit monitoring in order to get your "free" credit report. Countless victims did not realize that in order to get their "free" credit report that they were committing to a $79.95 annual fee for credit monitoring (Source: http://www.ftc.gov/opa/2005/08/consumerinfo.shtm). Those bogus claims caught the attention of the Federal Trade Commission and state consumer protection agencies which took action against the leading purveyors of the so-called "free credit reports". “Consumers paid the price for ordering free credit reports from freecreditreport.com,” said Lydia Parnes, Director of the FTC’s Bureau of Consumer Protection. “It’s unfair and deceptive to promise consumers something for free and then trick them into paying for products they didn’t want in the first place.” (Source: FTC). These consumer protection agencies ordered refunds for many of the victims, corrective advertising, and even a required statement on the miscreants' websites that must prominently disclose that there are fees or paid memberships for their "free service" and that a legitimate free service is also available.

In 2003, a federal law, "The Fair Credit Reporting Act (FCRA), was amended by the Fair and Accurate Credit Transactions Act (FACTA) to provide a mechanism for American consumers to receive up to three free credit reports per year" (Source: Wikipedia). In response to the FACTA, the three major credit bureaus (TransUnion, Experian, and Equifax) entered into a joint venture called "Central Source LLC" in order to comply with the law. Central Source set up a toll-free phone number and a website where all consumers can get a totally free credit report from each of the three credit reporting agencies over a 12 month period. These legitimate free credit reports can also be requested by mail. In order to help protect the consumer from other questionable websites that claim to offer free credit reports, the law now requires those sites to prominently display the following statement in a box, along with a link, that says, "You have the right to a free credit report from AnnualCreditReport.com or 877-322-8228, the ONLY authorized source under federal law." Despite the federal statute, there are still several hundred fraudulent websites that claim to offer free credit reports that charge fees, do not post the mandated disclosure and link, and are often a front for identity thieves.

The authentic and legitimate free credit report website mandated by the Fair and Accurate Credit Transactions Act (FACTA), and administered by Central Source is AnnualCreditReport.com. For those who may not wish to use an online request for credit reports, they can call 877-322-8228, while those who may prefer to request their credit reports in writing may complete a written request available online from http://www.annualcreditreport.com/cra/requestformfinal.pdf and mailing it to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. Everyone is entitled to one free credit report from each of the three credit reporting agencies; some people prefer to order all three at once, while others prefer to spread out their requests over the year in order to better monitor their credit. Regardless of the method used to obtain the legitimate free credit reports, the recipient will also receive information on how to read the credit report, and challenge any potentially inaccurate information that may be posted. Periodic and frequent review of one's credit report is one of the recommended tools to help fight possible identity theft. AnnualCreditReport.com has been proven to be very popular, with 52 million free credit reports provided to consumers in its first two years of operation. Some pundits have warned that a consumer requesting a copy of his own credit report will lower his credit score, but competent experts disagree with this. Requesting your own credit report counts as a "soft" inquiry which does not adversely impact your credit score; when a potential lender requests a credit report that is referred to as a "hard" request or "pull" which may adversely influence a credit score.

Because the personal information required in order to request a credit report is often very sensitive, and because a credit report contains detailed personal information about the consumer, identity thieves can easily use this purloined information to propagate their criminal activities. The FTC has posted the following warning, "AnnualCreditReport.com is the only federally mandated and authorized source for obtaining a free credit report. The Federal Trade Commission cautions consumers to be aware of "impostor" websites that have similar names or are deliberate misspellings of the real name." In an independent investigation in 2005, the World Privacy Forum found 233 domain names with misspellings or minor variations of AnnualCreditReport.com, with 112 of those suspicious links connecting directly to fee based services, pornographic websites, link farms (selling the misleading domain names), and other questionable websites. It is quite possible that some of these rogue websites could use the information provided by the consumer for the purposes of identity theft.

While the consumer is absolutely entitled to those three free credit reports every 12 months, many consumers are more concerned about their credit scores. Credit scores are commonly used to determine credit worthiness (risk), and the interest rates charged for credit, as well as for other purposes where trust and credibility are valid considerations, such as for many types of insurance. Central Source is allowed to offer for a fee, credit scores as determined by the big three credit reporting agencies; links for this paid credit score are available on AnnualCreditReport.com. It should be noted that there are many different methods and weightings used to calculate a credit score, and different lenders and other companies often come up with different credit scores using the same basic data. For anyone who would really like a free credit score, even though it may differ from the score used by many lenders, the web service at CreditKarma.com is very popular. While many of the websites offering "free credit scores" are fronts for fee based subscription services, similar to what happened in the past with the questionable websites offering free credit reports, CreditKarma is indeed free, and has earned an "A" rating from the Better Business Bureau (BBB) in San Francisco, where it is headquartered. (http://www.bbb.org/greater-san-francisco/business-reviews/credit-services/credit-karma-in-san-francisco-ca-295805)

According to the CreditKarma.com website, "Get your 100% free credit score instantly, securely, and safely. Credit Karma provides truly free credit scores to consumers direct from the credit bureaus. Your scores are retrieved securely with no hidden fees." CreditKarma offers free daily monitoring of members' credit scores, with email alerts of any significant changes, as well as scheduled monthly emails with CreditKarma's calculated credit score. These alerts and monthly emails explicitly explain what factors or events, if any, impacted the posted credit score; prompt disclosure like this allows the user to immediately take any necessary remedial action, and may also serve as a key indicator in the event of identity theft. CreditKarma offers a free "Credit Report Card" which details how it arrived at the listed credit score. This report card compares the members' credit reports and scores to national averages, and includes a calculator (slider type) to demonstrate how a change in each type of item listed influences the members' credit score. With this calculator, a user can approximate the impact of a late payment, cancelling or obtaining new credit cards, paying off a mortgage, and other events that may influence a credit score. While there are no fees charged to the user, CreditKarma does generate revenues by offering, "... individual savings offers from leading providers to maximize your savings potential. Credit Karma shows you the best offers based on your credit report data."

With identity theft as common as it is, and the importance of an accurate credit report and credit score to our daily financial lives, AnnualCreditReport.com and CreditKarma.com may be valuable resources. Be aware that both legitimate free services require that the user discloses private and personal information, that disclosure is necessary in order to obtain the appropriate free reports. By obtaining your three free credit reports every 12 months from AnnualCreditReport.com, and subscribing to a free service such as CreditKarma, there is much a user can do to verify the accuracy of his credit report and credit score, as well as an opportunity to correct any possible errors. All of this is vitally necessary in order to protect our financial health.


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