When free becomes fee
Freedom’s just another word for $12.95 a month.
The jingle advertising freecreditreport.com is hard to get out of your head if you hear it too many times on late-night cable, hammering home the freeness of it all.
And the first word on the site itself is -- you guessed it -- “FREE.”
But the free comes with an asterisk.
You are indeed entitled, by law, to three personal credit reports a year, one from each of the national credit bureaus, at no charge.
The freecreditreport.com site, however, is not part of that program, despite its name and the fact that it’s owned by one of the nationwide bureaus.
Its “free” is only temporary. Then like Cinderella’s carriage, it turns into something else: a $12.95 monthly service.
And it’s far from the only minefield that can be encountered in trying to obtain the no-strings credit reports.
“They have to give you the free reports, but they make it really challenging for consumers,” said Pam Dixon, executive director of the nonprofit World Privacy Forum. “It’s hard to separate the parts that are federally mandated and the parts that are for pay.”
All of the sleight of hand is perfectly legal, although freecreditreport.com has run afoul of the Federal Trade Commission for allegedly crossing the line.
The site was charged with deceptive marketing for not making clear that the reports weren’t free forever. In two settlements, the company paid a total of $1.2 million but didn’t admit wrongdoing.
Under the 2003 provisions of the law that regulates this area, the credit reporting bureaus weren’t banned from advertising their paid services even while offering the free reports.
“Their argument to Congress was, ‘You are forcing us to do this at our cost, so you need to allow us to do some marketing of other services,’ ” Dixon said.
Not that all the paid services are bad. One factor that is often crucial to getting a loan and negotiating its terms is a credit score: a number determined separately by each reporting bureau based on numerous factors.
That number isn’t included in the no-strings-attached, free report. But it can, if you carefully follow the rules, be legally obtained free too.
With all the hassles involved, is it worth it to get the information?
“It used to be that a credit report was something that was checked only if you wanted to take out a loan or a mortgage,” said Joel Winston, associate director of privacy and identity protection at the FTC.
“Now, it’s used to make all sorts of decisions about you. If you apply for a job, if you want to get insurance, there is a chance that someone will be looking at your credit report.”
This makes it crucial that it be checked regularly for errors, especially in this era of identity theft when a scammer’s actions could cause damaging entries to be made to your credit history without your knowledge.
The site where you get your no-cost, no-strings reports is www.annualcreditreport.com -- just try singing that in a jingle.
The site is relatively plain in appearance, and at the bottom are the logos for the nationwide credit bureaus that were forced to establish it: Equifax Inc., Experian and TransUnion.
The logos look innocent. But they are online trapdoors: If you happen to click on one of them, you’ll be whisked away to the land of pay.
For example, click on the Equifax logo and you find yourself on that bureau’s home page with a variety of paid programs, including unlimited credit reports for a monthly charge.
“There are so many opportunities to get diverted,” Dixon of the World Privacy Forum said.
Even if you don’t vary from the AnnualCreditReport.com process -- which gives you the chance to get each of the three reports separately or simultaneously every 12 months -- several paid offers will be presented.
There is a way to avoid the paid promotions. Federal law says that consumers can apply for their free reports not only online but also by telephone ( 322-8228) or mail (the request form is at https://www.annualcreditreport.com/cra/requestformfinal.pdf).
The advantage of getting the reports online is that they can be obtained in a matter of minutes.
Phone or mail requests can take as many as 15 days to be fulfilled. But there are far fewer chances to wander into paid services.
Dixon thinks it’s worth the wait.
“The most beautiful system is by mail,” she said. “It’s easy in, easy out, and you are not likely to click somewhere you might get charged.”
But what about the credit score, which can be crucial in determining what interest rate you’ll be charged for a loan?
You can’t figure it out from your free credit report; the bureaus use factors both on and outside the report to calculate it. And each has its own proprietary method.
Also, many lenders, particularly in the mortgage business, use a score from Fair Isaac Corp. called FICO.
Before you even try to get a score that will be useful, determine which one will be referenced by a potential lender.
“If you are going to buy a house, call mortgage lenders you might use to see what score they will be looking at,” Dixon said. “If you are going to get an auto loan from your bank or credit union, call them.”
You can visit www.freecreditreport.com if you want the score issued by Experian. For Equifax or FICO, see www.myfico.com.
Both have free, 30-day trial programs for new customers. But be careful to click only on the free trial programs. There are plenty of more expensive options on the sites.
Getting these reports does not bar you from the no-strings reports on AnnualCreditReport.com.
In a test of freecreditreport.com, the Experian report and score were obtained online following directions that included entering a credit card number.
After 30 days, the automatic charge to the card would be $12.95 a month for a variety of services, including additional reports and monitoring.
Canceling before then provided the initial information at no charge. But the canceling could not be done online. In fact, it was not readily apparent how it could be accomplished.
But there were a toll-free customer service number and a polite woman on the other end. She was resistant to the cancellation, saying this was a “once-in-a-lifetime” opportunity and suggesting an alternative, monitoring-only program for about $5 a month.
Finally she gave in.
“Since you have decided,” she said with a touch of wariness in her voice, ending on an upbeat note by saying the rest of the 30-day period would be in force.
The call took only eight minutes. The report and score were truly free.