In the current financial climate, more and more people are becoming concerned about their credit standing and whether they are borrowing more than they can afford, so the idea of a free credit report can seem very attractive. However, there is a lot of confusion about which free credit report offers are a legal entitlement for all citizens, and which ones have strings attached. Consequently, many people have been caught out.
Under the 2004 Fair and Accurate Credit Transaction Act, usually known as FACTA, every consumer is entitled to an annual gov free credit report from each of the three major credit reporting agencies. These reports can be obtained via the web site or phone line that have been jointly set up by the three agencies, Experian, Equifax and TransUnion. You can request all three reports at once, which makes it easier to compare them, as they do not necessarily all have the same information. Alternatively, you can request the three different reports at four-monthly intervals throughout the year, so you can keep track of transactions more closely. You need to be clear that these reports do not include your credit score.
The confusion arises because it is also possible to obtain reports without charge when you sign up for a credit monitoring service. These offers are used as an incentive to get you to sign up, and last for a trial period of anything from 7 days to 30 days, depending on the service. In most cases you are required to provide a credit card number in order to receive the reports, and the card starts to be charged as soon as the trial period is up, if you have not canceled. Many people do not realize that these offers are not part of the FACTA scheme, until they are charged, and consequently regard these sites as a scam. It is true that some of them do seem to set out to make their sites as similar as possible to the free site.
Although some people do sign up for a credit monitoring service without intending to do so, there are many others who see these services as providing a number of benefits. One of these benefits is protection against identity theft, which is becoming increasingly prevalent. The service will monitor your credit reports on a regular basis and automatically alert you to any changes or suspicious activity. The services vary in the frequency with which they check the reports, so you should choose one with a higher level of frequency, for more peace of mind. A good service will also guarantee reimbursement of any expenses you incur, if you are not alerted in time to any fraudulent activity.
However, there are certain drawbacks to using a credit monitoring service. Some types of fraud will not be picked up by the service. For instance you will not be alerted to somebody using your Social Security Number to open an account, if your name is not used as well, or to a person using your details to apply for a job. You also have to be aware of the cost. You will probably discover in the fine print that the monthly charge that is quoted only covers checking of reports from one of the three agencies, so if you want all three to be covered, it will cost three times as much. You could actually monitor your own reports for considerably less money, though of course this is extremely time consuming.
Credit is becoming an increasingly essential aspect of society, both because of the growing tendency to use credit rather than cash for all transactions, and because more and more people need to borrow to make ends meet. This means that being aware of your credit status, and keeping it in good repair, is more important than it has ever been. Taking advantage of a free credit report when it is offered is an excellent idea, but you have to make sure you know how it is meant to be used.