Free Credit Report – Sometimes You Get What You Pay For

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Sometimes I think Google has a sense of humor. I don’t know if the sense of humor is programmed into its search algorithm, added by Google’s search engineers, or just a fluke, but it’s definitely there. And a good example of it can be found if you search on the term “free credit report.”

When I search for free credit report, here are the top three results (after you scroll past the paid results):

1. AnnualCreditReport.com: The site established as part of the FACT Act where consumers can get a copy of their credit report for free every 12 months from each of the 3 major credit bureaus.
2. FreeCreditReport.com: A site run by Experian that, oddly enough, charges consumers if they want to see their credit report and score instantly. It also signs you up for a “free” 7-day trial, after which you must pay $16.99 a month if you don’t cancel.
3. The Federal Trade Commission: The FTC is of course part of the federal government, and it warns consumers that if you want a free copy of your credit report, annualcreditreport.com is the place to go, not sites like freecreditreport.com.

(Keep in mind that Google search results can change daily and vary based on where you are located, so your results may vary.)

Part of the irony here is that the FTC sued ConsumerInfo.com, Inc. for driving consumers to freecreditreport.com with advertisements of “free” credit reports.” The FTC complaint alleged that “ConsumerInfo deceptively advertised and promoted its “free reports” at its “freecreditreport.com” Web site, without disclosing that it was not associated with the official annual free credit report program.” ConsumerInfo settled the lawsuit.

Today, here’s what the FTC says about free credit reports:

AnnualCreditReport.com is the ONLY authorized source for the free annual credit report that’s yours by law. The Fair Credit Reporting Act guarantees you access to your credit report for free from each of the three nationwide credit reporting companies — Experian, Equifax, and TransUnion — every 12 months. The Federal Trade Commission has received complaints from consumers who thought they were ordering their free annual credit report, and yet couldn’t get it without paying fees or buying other services. TV ads, email offers, or online search results may tout “free” credit reports, but there is only one authorized source for a truly free credit report.

The Pros and Cons of AnnualCreditReport.com

Now getting your free report from annualcreditreport.com is a great resource. In fact, I just pulled my report from Experian through annualcreditreport.com. Perhaps the best reason to get your free report is to check for errors. In my Experian report, for example, it has my birthday wrong, and incorrectly associates a telephone number and residential address to me (they actually belong to a business partner). I’ll be contacting Experian to correct these items.

But as much as we all like getting things for free, sometimes you get what you pay for. And that’s true with free credit reports as well. In fact, there are two big drawbacks to getting your free credit report from annualcreditreport.com.

First, while you can get your credit report at no cost, your credit score is not included. The Fair and Accurate Credit Transactions Act of 2003 only requires the 3 nationwide credit reporting agencies to provide free credit reports, not free credit scores. There are several reasons for this, effective lobbying by the credit agencies chief among them. But regardless of the reasons, the fact is you can’t get your FICO score from annualcreditreport.com. If you don’t want your credit score, this drawback is of no consequence. But if you are trying to improve your credit score, it helps to know what it is. And that leads us to the second drawback.

Second, it can be a real challenge to make sense of your free credit report, and nearly impossible to understand how your report affects your credit score. When you get your “free” credit report and score from other sources by signing up for a free trial of credit monitoring service, you get your credit report in a very different format than you do through annualcreditreport.com. You also typically get a detailed explanation of how your credit report affects your credit score. None of this information is available through annualcreditreport.com.

Annualcreditreport.com vs. Credit Sesame

Let’s take a look at an example from my credit report. We’ll compare my credit report from AnnualCreditReport.com with the credit report and scoring information you can get for free at Credit Sesame. First, here is a sample from my credit report as provided through AnnualCreditReport.com:

free credit report example

As you can tell, you get information about each credit account, but nothing more. In contrast, the amount of information and analysis you get from Credit Sesame is extensive. First, you’ll see your credit scores from Experian:

Credit Sesame Credit Score

And then Credit Sesame provides a list of those factors from your credit report that affect your score:

Credit Score Factors

The above factors, both positive and negative, are listed in their order of importance. That is, the first factor in each list has a greater affect on a credit score than does the last factor.

With all of this information, it’s easy to identify those portions of your credit file that need to improve to increase your credit score.

So should you opt for a truly free credit report?

The free credit report you can get from annualcreditreport.com is ideal if you want to look for errors in your report. And it’s a good idea to check your report each year for errors. But if your aim is to improve or monitor your credit score, annualcreditreport.com isn’t the right choice. Instead, a service like Credit Sesame will provide far more information to help you understand, analyze, and improve your credit score. And because Credit Sesame is totally free, it’s an easy decision to make.

Published or Updated: October 13, 2012
About Rob Berger

Rob founded the Dough Roller in 2007. A litigation attorney in the securities industry, he lives in Northern Virginia with his wife, their two teenagers, and the family mascot, a shih tzu named Sophie.

Comments

  1. Credit Sesame is a great tool for people to better understand how to change their behavior. Credit scores provide great guidance on how to manage credit responsibly.

    As you mentioned, AnnualCreditReport.com is great for checking possible errors, but many people may not know what to look for and why: missing information, and data that might not belong to them.

    The biggest challenge by far for credit bureaus is deciding which data belongs to which individual. There are many anomalies in how contact information gets collected and combined. Each bureau uses different matching rules, so looking at all three reports for these types of errors can provide an immediate boost.

  2. Ken Eade says:

    Annualcreditreport.com is down now anyway, so there currently is no way to get a free credit report.

  3. WM says:

    Annualcreditreport.com is working. Ken, it probably was just a (very) short-term glitch.

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