ICFE eNEWS #07-18 - August 6th 2007
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Sites Offering 'Free' Credit Reports: Worth Consumer Consideration?
Review of 24 Sites Shows Potential for Confusion and Unnecessary Expenses 

San Diego, CA. - TA new report from Consumer WebWatch.org examined Web sites that offer consumers paid access to their credit reports in combination with credit scores, credit monitoring, and/or identity theft insurance, while many consumers think they are on the government's free annual credit report site (www.annualcreditreport.com).

These sites (some bogus ones included) are alternatives to annualcreditreport.com, created as a result of the Fair and Accurate Credit Transaction Act of 2003(FACTA), which entitles consumers to obtain, once a year, a free copy of their credit reports from each of the three major credit reporting bureaus - Equifax, Experian, and Transunion.

The report was authored by Robert N. Mayer, and Ph.D. Tyler Barrick of the University of Utah for Consumer Reports WebWatch 101 Truman Avenue Yonkers, NY 107031057 www.ConsumerWebWatch.org

For the complete report: http://www.consumerwebwatch.org/pdfs/creditsites.pdf

Study Purpose

The purpose of this report was to examine the operation of Web sites - other than the government sanctioned annualcreditreport.com - that offer consumers "free" access to their credit reports. As a result of the Fair and Accurate Credit Transaction Act of 2003 (FACTA), all consumers now have the right to request and obtain, once a year, a copy of their credit reports from each of the three major credit reporting bureaus - Equifax, Experian, and Transunion. Prior to FACTA, consumers had the right to obtain a free copy of their credit report only under a limited set of conditions: (1) they were denied credit, at least in part, based on the information contained in a credit report; (2) they were unemployed and would apply for unemployment within 60 days; (3) they received public assistance; (4) they had been a victim of identity theft and placed a fraud alert on their file; or (5) believed their file contained inaccurate information due to fraudulent activity (Consumers Union, undated).


Across 24 sites studied, there was a total of 58 offers. The majority of sites (16 out of 24) contained three offers, at least one of which involved a free credit report. Two sites bore two offers; six sites only one. (Three sites contained more than three credit related offers, but we coded only the first three offers on a given Web site.)

The offers on the twenty four sites vary in detail, but the majority (51) fell into one of three broad categories:
A. Buy three credit reports and get one credit score for free, sometimes with the option of buying additional credit scores (8 offers)
B. Buy credit reports and scores, with nothing offered for free (10 offers)
C. Receive one or more free credit reports and/or one or more free credit scores when enrolling in acredit monitoring service, often with a free trial period (33 offers)

Recommendations to Consumers

Some sites offer consumers a better financial deal than others do. There are a variety of "best buys,"or combination of buys:

1. For the consumer who wants to obtain the most for free and is able to cancel before the end of a seven day trial period before charges are incurred, the best deal was found at spendonlife.com (a member of the privacymatters.com branch of the Transunion family). This was the only Web site that claimed to give the consumer all three credit reports and all three credit scores during a free trial period. However, there were some possible drawbacks. In addition to the short trial period, consumers were assessed an immediate but refundable $1 processing fee. For the duration of the credit monitoring service, the consumer also had no choice about being charged an additional $1 per month for membership in SavingSmart, a program of shopping discounts.

2. Another strategy is to sign up for a thirty day free trial of both experian.com and transunion.com credit monitoring services, then cancel before the end of thirty days. This will yield one free report and score from each of these two credit reporting companies. Equifax does not offer a similar free trial period for its credit monitoring service, but a consumer can obtain a free copy of his or her Equifax credit report via annualcreditreport.com and purchase an Equifax score for $7.95. By combining these three actions, a consumer can obtain all three credit scores and all three credit reports for $7.95, with the additional advantage of being able to stagger access to the services over several months. But consumers must remember to cancel services before the end of free trial periods.

3. Consumers willing to pay for the convenience of getting three credit reports in conjunction with three credit scores from a single site at a single time could shop nationalcreditreport.com. For $23.95, the site provided three reports, three scores, and a first month of credit monitoring. The service can be cancelled after one month. There is no free trial and the $23.95 monthly charge is recurring until cancellation.

4. If credit monitoring beyond one month is important to a consumer, several sites offer a free trial followed by a $9.95 monthly charge for one credit report, one credit score, and monitoring via one of the three credit bureaus. Similar services covering all three bureaus can be purchased for as little as $19.95 (and as much as $39.95) per month.

5. Consumers Union recommends that consumers unbundle the purchase of scores, reports, and credit monitoring, at least initially. Start exercising your right under the FACT Act to obtain free copies of credit reports from each of the three credit agencies using annualcreditreport.com. For consumers also curious about their credit scores, one or more can be purchased at low cost when consumers access annualcreditreport.com. At the time of this study, prices for these scores were: $5.95 for Experian, and $7.95 for Equifax and Transunion. The total for all three is $21.85. Contrast this amount with the $47.85 one would pay for three scores and three reports from myfico.com or the $39.95 charged by several other sites. Plus, using the strategy of optimizing the value of using annualcreditreport.com, the consumer can stagger access to reports across several months. After a consumer has reviewed the contents of all three credit reports and perhaps examined all three credit scores, he or she should then decide whether credit monitoring is likely to be of value (for example, as a means of detecting identity theft) and whether it is important to have unlimited access to one or all three credit reports and scores. Security freezes on credit reports, provided by law in a majority of states, may be a less expensive and more effective alternative to credit monitoring services as a means of preventing identity theft. To see which states have the security freeze, see: http://www.consumersunion.org/SecurityFreeze.htm For the complete report: http://www.consumerwebwatch.org/pdfs/creditsites.pdf

About the ICFE:

The Institute of Consumer Financial Education (ICFE) was founded in 1982 by the late Loren Dunton (creator of the Certified Financial Planner (CFP) designation).  The ICFE is dedicated to helping consumers of all ages to improve their spending, increase savings and use credit more wisely. 
The ICFE is an award winning, nonprofit, consumer education organization that has helped millions of people through its education programs and Resources. It publishes the Do-It-Yourself Credit File correction Guide, which is updated annually. The ICFE has distributed over one million Credit/Debit Card Warning Labels and Credit/Debit Card Sleeves world wide.

The ICFE became an official partner with the Department of Defense/Financial Readiness Campaign in June of 2004.The ICFE was an active partner in the California Student Debt Resource Awareness Project (CASDRAP) which resulted in a new web site: (studentdebthelp.org).  CASDRAP disbanded in 2010, shortly after the web site project was completed.  In 2011 the ICFE assumed the single sponsorship of the (studentdebthelp.org) web site and is now responsible for its content and operation.

The ICFE is also an on-line help for consumers who spend too much.  ICFE's spending help was featured in PARADE Magazine in the Intelligence Report section. The money helps and tips are from the ICFE's Money Instruction Book, our course in personal finance.

Visit the ICFE's other web sites at: www.financial-education-icfe.org and studentdebthelp.org.  Both sites helps consumers and students with mending spending, learning about the proper use of credit, budget and expense guidelines, how to set up and implement a spending-plan and also how to access financial education courses and how to teach children about money. Other ICFE services include: Ask Mr. G,  a free eNews, and an online resource center for students, parents and educators, plus financial education learning tools and a book store.

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