Free Credit Report Basics
Keeping up with your credit reports is essential for anyone who is serious about their financial well-being. They may be the only way for you to detect if your identity has been stolen. This post will show you how to get three free credit reports a year (through a government run program) at annualcreditreport.com, with no strings attached.
What is a Credit Report?
Let’s start with the basics on this one. You can get a free credit report from each of the three major credit reporting agencies: Experian, TransUnion, and Equifax. Credit reports will show you all of the credit accounts (including loans of any kind) that you have open at any time or have had open and your payment record by month for each.
To fully understand what a credit report is, it is important to differentiate it from a credit score.
What is a Credit Score?
A “credit score” is well defined by the FTC,
A credit score is a number — typically between 300-850 — that estimates how likely you are to repay a loan and make the payments on time. Credit scoring systems calculate your credit score in different ways, but the scoring system most lenders use is the FICO score.
Your credit score is based on information in your credit report. Businesses use your credit score to help decide whether to give you credit and what the terms will be — including what interest rate you’ll pay to borrow money.
A high score means you have “good” credit, which means businesses think you’re less of a financial risk. That means you’re more likely to get credit like a loan or credit card. A low score means you have “bad” credit, which means it will be harder for you to get credit. You’re more likely to pay higher interest rates on credit that you do get.
Some insurance companies also use credit report information to help decide whether to give you insurance and what premium they’ll charge. The credit scores used by insurance companies are sometimes called “insurance scores” or “credit-based insurance scores.”
The method that I highlight below will be for free credit reports, not credit scores.
You can get your TransUnion and Equifax credit score for free using Credit Karma. They also give you a free VantageScore, which is increasingly being used by creditors instead of a FICO score.
When Should I Use a Credit Report and when Should I Use a Credit Score?
Credit reports serve two main purposes:
- To highlight any long-lost open accounts or accounts you didn’t even know you had open (that maybe even were not opened by you). You can then remedy by disputing the information or closing the accounts.
- To clean up your credit history prior to an event where you will need to apply for credit.
It is best to check your credit reports often – at least a few times per year, just to stay on top of things.
Credit scores should be used in advance of applying for credit. If your score is relatively low, you may not be able to get the best rates when getting credit, and a score may indicate that you need to do some things to remedy that.
Annualcreditreport.com Versus Freecreditreport.com
Remember all those catchy jingles on the commercials for ‘freecreditreport.com’. Just sign up for your “free trial membership” where you submit your credit card. Getting your “free” Experian credit report automatically enrolls you into their credit monitoring service for $24.99 per month, and you hopefully forget about cancelling prior to the end of the membership. Ironically, Credit Karma is now offering free credit monitoring as well, so paying for credit monitoring just got a whole lot less appealing.
The FTC tried to cut down on free credit report scams by offering counter-advertising and the folks at freecreditreport.com have since focused their ads on more profitable territory by promoting freecreditscore.com.
As the FTC’s free credit report disclaimer site says, annualcreditreport.com is the ONLY authorized source to get free annual credit reports under law. It is a website created by Experian, Equifax, and Transunion, in coordination with the FTC, and allows you to access free credit reports (no strings attached).
Rotate to Get Three Free Credit Reports Per Year
If you plan accordingly, you can get three free reports on annualcreditreport.com via each of the three agencies per year. Here is an example on how I do this:
- Jan. 1: I get my free Experian Report
- Tax deadline: I get my free Transunion report.
- Start of football season: I get my free report from Equifax.
You can add these dates to your calendar to notify as a reminder.
Next, mark one day post those dates on next years calendar with the same agencies, and you’re set.
Credit Karma Now Offers Free Credit Report Access!
Credit Karma now has free credit report access too. In addition to a free TransUnion credit score, VantageScore, Home/Auto insurance scores, Credit Karma is now offering complete access to your full TransUnion and Equifax credit report. This gives you more consistent access to credit reporting throughout the year (versus just once via annualcreditreport.com).
Free Credit Report Discussion:
- Where do you get your free credit reports?
- Have you caught any discrepancies in your report that you’ve had to dispute?
- Have you been sucked in by the catchy jingles in the past?
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I used the annualcreditreport.com recently to obtain my credit report from Experian. Initially I was quite pleased. I got a great report with what appeared to be no strings attached, and was never asked to put in any credit card information. I was offered to pay for an account to see the actual score, but simply declined. That was last week. Today, however, I was routinely checking my accounts when I found a pending pre-authorization charge from Experian dated yesterday. I immediately called my bank and they said since I had not authorized any transactions and that it took place about a week later than I visited the site that my information was probably compromised and that I needed to cancel my current card while they took care of the un-authorized charges. I’m a little unsettled by the fact that the charge placed to my account was to Experian only a week after visiting their site. I checked all my other accounts and everything seems to be fine with them. Has anyone else had this happen? I entered absolutely no credit card info while on the site and was not notified of any authorizations that would take place, nor did I authorize any payments to them.
I also requested a FREE credit report from Experian. As you, I was pleased and thought all was well. I (unlike you – sadly) do not check my accounts on line; when my charge card came in, there was a charge for $19.95 from Experian. I immediately thought it was my fault for perhaps checking something I shouldn’t have. The next month there was another $19.95 charge from Experian. The bill came as I was taking my bags to the car to go away. I placed the bill on the table with the intention of taking care of it upon my return a couple weeks later. It went by the wayside, until the next months bill came in and there was yet another charge. I called the company, very annoyed now, and they were as nice as could be and said they were only allowed to remove two of the monthly charges. I asked how this could happened, because I didn’t recall requesting anything but the FEE credit report. He didn’t know, but I was now removed and it wouldn’t happen again. I wonder how many unsuspecting, was too busy with multiple jobs people have had this happen to them. I am disappointed in Experian.
I had a $19.95 charge from Experian on this month’s cc statement and called to inquire about it as I had not ordered nor signed up for anything from them. Turns out this was the third of three monthly charges I had incurred from them (shame on me for not scouring my previous two statements – that has changed!) The Experian rep removed all three charges and said that someone had used my cc info to sign up for their monthly service (creditreport.com). Two previous attempts to use my number to create an account with them had been denied; don’t know what triggered the denial or why this third attempt succeeded. I had NO IDEA this was occurring. At the time this fraud occurred, the company was NOT VERIFYING THE NAME OF THE CARDHOLDER OR CARD SECURITY CODE, just blindly accepting the card number, but the rep said this policy has now been changed (as of April 2012). Un.be.lieve.able behavior for a company dealing with such sensitive information!!! As to how the thieves could benefit from this false account, the rep said that they require ‘enough’ information on a requested report in order to release one…I would dearly love to know how much is ‘enough’. I wonder if the previous two posters were also the victims of a similar scheme????
I have to dispute two of your (and everyone else’s) claims.
First off, there are strings attached to getting a “free” credit report. Getting your credit report is added to your report and seen by creditors as negative information (you are getting your report to see if you have successfully hidden adverse information). Also, you need to give your new address, allowing the “evil” credit reporting companies to better keep tabs on you (but if you pay for a report, only a SSN is required).
Then, you CANNOT get one free report per year. You can at best get one free report (“free” in exchange for updating your personal information for the credit reporting agency) after 365.25 days have elapsed from your prior request.
Oh, and one more thing, they are allowed to not give you a “free” report at all (unless you pay them), citing “technical difficulties” such as the ludicrous claim that they could not give you a “free” report because you do not have enough of a credit history.