Credit Reports

Beware Free Credit Report Scams

Apparently there is another wave of scams circulating about getting your free annual credit report. These scams involve everything from outright identity theft, to sneakier, semi-legal, tricks to get you to sign up for expensive "credit monitoring" as part of getting your free credit report.

Here are the facts:

1) You do not have to pay any money for any reason to get your free annual credit report, no deposits, no shipping costs, no copying or printing fees, nothing!

2) You should not sign up for a free trial to get your legally required free credit report. The credit bureaus themselves are some of the slimiest schemers here. You go to the credit bureau website thinking that they would point you to the free credit reports that the law requires. Next thing you know, they are asking you to sign up for a "free-trial" for their credit monitoring service. Keep in mind that this so-called free-trial comes with an automatic renewal for the full price non-trial the very second you free trial ends. Guess what percentage of people end up paying the full fee when they forget to cancel their free trial? Don't sign up for anything, not even a free trial.

The Feds are constantly trying to warn consumers about these scams, but the weasels are just too fast. Be smart, be safe, save your money!

Keep in mind that there is not such law requiring a free credit SCORE, only the credit report. You can check out my Credit Karma review to see about getting a free online credit score. They also offer free credit monitoring which I made sure was not some Credit Karma scam before mentioning to my readers.

FREE - Means Free

I'm going to jump in here and remind you that you are allowed one free credit report per credit bureau per year.  This free report is completely free and DOES NOT require you to sign up for any other kind of service.  There are a lot of very deceptive offers out there that make it sound like you are getting your free report when you are actually buying something and they are giving you a credit report as an enticement.  Of course, this is a rip off because you are already entitled to a free report.

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In addition to companies pretending to offer you your free credit report and attaching a subscription or other product there are companies that offer to "fix" your credit report.  There is no way to fix your credit other than to add good things to it while allowing the bad things to get older and less important.  Anyone who says different is probably selling you a bag of goods.

The Federal Trade Commission (FTC) cautions consumers to be wary of companies that make claims regarding credit repair. These companies, commonly called credit clinics, don't do anything for consumers that consumers cannot do for themselves at little or no cost. Beware of any organization that offers to create a new identity and credit file for you.

So called debt consolidation services are another problem. A finance manager at a car dealership told me that the number one problem he sees is people who went through debt consolidation.  When someone "lowers your debt" what they are doing is asking the company that you owe money to write off part of your loan as uncollectable.  Yes, it lowers the amount you owe them, but it is the same thing for your credit report as NEVER PAYING THAT AMOUNT BACK!  Next to bankruptcy, this is the biggest black mark that you can have on your credit.  The other trick they use is to call and ask the company you have the debt with to accept longer re-payment terms.  This lowers your monthly payment but it takes longer to pay off.  Also, most companies report the deferred part of the payment as late, so every month more and more money is being reported as late.    Unless you are facing imminent bankruptcy, do not use any kind of debt consolidation service.

Feel free to call your credit card company or bank and ask if there is anything you can work out.  They are more likely to be willing to help if this call comes earlier rather than later.  If you've missed your last 10 payments don't expect much sympathy.  If you've missed one payment and are struggling to come up with the next one, they are more likely to see if there is something that they can work out.  Remember, these aren't charities.  They are businesses who need to make a profit so don't expect the sun and the moon for nothing.

Finally, credit counseling is counseling only.  They'll show you how to make your payments and setup a budget.  They WILL NOT collect payments from you or "lower your debt".  They will also not charge you anything.  Go through your state government website to find the real credit counseling organizations in your state.

Credit Score

Your credit score is a number that is derived from your credit report.  Read all about Your Credit Score

Also, check out the Finance Gourmet Blog where we frequently post about how to get good credit card deals and save money with credit cards.