Credit monitoring at no cost to you

Times Staff Writer

Cindy Lupica last week signed up every member of her family to participate in a class-action settlement with TransUnion Corp., one of the three major credit bureaus.

The settlement will give each member of her household -- possibly even 12-year-old Gregory -- nine months of a free credit-monitoring service.

Last week was the first week you could register for the settlement, and Lupica, a lawyer in La Canada Flintridge, wasn't wasting any time. Her 16-year-old son was recently the victim of an attempted identity theft. The settlement gives her a free and easy way to find out whether anyone else's credit file has been compromised.

"Given my limited time to research, I thought this would be the easiest way to check," she said.

As an added benefit, Lupica and her husband and children will be able to learn their credit scores. They also can check at any time during the nine months of monitoring to see how those scores have changed.

An estimated 160 million Americans qualify for free credit monitoring under the settlement. Should you sign up? There's almost no reason not to.

The settlement was reached last month to resolve a lawsuit accusing TransUnion of illegally breaching consumers' privacy by selling their credit information to marketers. TransUnion said it didn't violate the law but agreed to pay $75 million in cash and provide free services that retail for $9 to $15 a month.

Anyone who had an open credit account -- a credit card, a mortgage, an auto loan or any other debt reported to the credit bureaus -- at any time between January 1987 and 24 days ago, May 28 -- can participate. That means most adults.

But signing up the children, as Lupica did, is a good idea because it will tell you whether someone has opened an account in their name. A child who doesn't have a credit file will be rejected from the settlement -- information that may prove comforting.

Lupica's experience with her 16-year-old shows that it never hurts to check.

When you sign up for the settlement, you can choose one of four options:

* A potential cash payment of an undetermined amount to be paid in two years.

* Six months of free credit monitoring.

* Six months of free credit monitoring, plus the right to the cash payment.

* Nine months of enhanced credit monitoring without the possibility of a cash payment.

Lupica chose the nine-month deal on the advice of a friend, who figured the chance of getting a significant amount of money out of the settlement was remote.

There's no official projection of how large the cash payments would be. They will come from the $75 million being put up by TransUnion, but that money will first pay attorneys fees and settlement costs.

If we assume that, say, half of the $75 million is used to pay fees and costs and that only 10% of those who could qualify for the settlement opt for the cash, each of those people would get less than $2.50.

As for the credit monitoring service, having access to your credit score is a nice bonus even though TransUnion is likely to provide a credit score it calculates, not the more widely used FICO score developed by Fair Isaac Corp.

But John R. Ulzheimer, president of Educational Services in Atlanta and the author of "You're Nothing but a Number," says TransUnion scores and FICO scores are very similar, even if the numbers are different.

"If you have very good credit with TransUnion," he said, "you will have very good credit no matter what model is used."

Managing credit wisely can pay off in reduced loan rates and sometimes better prices on insurance too.

What trashes your credit? Missing a payment is the big disaster. A person with a near-perfect score (anything over 800 in the FICO model) could see his or her score drop 100 points if even one creditor reports a seriously late payment, said Craig Watts, spokesman for Minneapolis-based Fair Isaac.

Unfortunately, it's tougher to improve your credit than it is to trash it. Recovering from that one gaffe could take 24 months of consistent, on-time payments, he said.

What can best boost your score?

Paying off revolving debt, Ulzheimer said. The closer the outstanding balance on each of your accounts is to the credit limit, the lower your score.

Notably, where credit limits count most is on credit cards. So if you pay off credit cards with a home equity loan, you improve your score even though you have the same amount of debt, Ulzheimer said.

But don't go on a shopping spree because you now have more room on those cards. That's a great way to crash your finances and, eventually, your credit score.

Other things you might learn from reading your credit report and watching your scores over time:

Few people are actually victims of identity theft, but if you are one, the first sign often is inaccurate personal information in your credit file.

If you see that your name or address is wrong, that could be an indication that somebody else had applied for credit in your name. In such a case, have the credit bureau correct your address, then look for other warning signs.

Also, if you see unfamiliar cards in your credit report, place a "fraud alert" on your file, which requires lenders to call you before issuing new credit.

Credit reports are also "organic," Ulzheimer said.

Be aware that credit reports are likely to change a bit several times a month as your creditors report on your accounts. When your report changes, so does your credit score.

"You could look at your credit score every day for 31 days and see six or seven different scores," Ulzheimer said. "These are dynamic systems. The minute something changes on your credit report, there is going to be a recalculation in your score."

To sign up for the TransUnion settlement, go to by Sept. 24.


Kathy M. Kristof welcomes your comments but regrets that she cannot respond to every question. Write to Personal Finance, Business Section, Los Angeles Times, 202 W. 1st St., Los Angeles, CA 90012, or e-mail

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