Ebook Sites Offering ‘Free’ Credit Reports: Worth Consumer Consideration?
The purpose of this report is to examine the operation of Web sites other than the government sanctioned annual credit report.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: they were denied credit, at least in part, based on the information contained in a credit report? they were unemployed and would apply for unemployment within 60 days? they received public assistance? they had been a victim of identity theft and placed a fraud alert on their file? or believed their file contained inaccurate information due to fraudulent activity (Consumers Union, undated).
A credit report is a document generated by a credit bureau, such as Equifax, Experian, or Transunion. It shows a person’s credit or repayment history over time, based on data from banks, merchants and other creditors.
- A credit score is one of several numerical summary measures, often ranging from 300 (negative) to 850 (positive), of the information contained in a consumer's credit report.
- Credit monitoring is a paid service that alerts consumers when inquiries are made into their credit reports, or the content of their reports changes. Some types of queries, such as those made by a bank when a consumer seeks to open a line of credit, can actually affect the credit score. Other inquiries, such as from marketers seeking information to make offers of credit, do not affect the score.
The right under FACTA to free credit reports was implemented according to a phased timetable between December 2004 and September 2005. Between December 1, 2004 and December 1, 2006, approximately 52 million credit files were provided to consumers for free by the three major credit reporting agencies via the annualcreditreport.com Web site (Federal Register, 2006). Simultaneously, an unknown number of consumers have visited alternative Web sites and obtained credit reports in conjunction with the purchase of other creditrelated services, typically, credit scores and/or credit monitoring services. This report focuses on these alternative sites and examines their offers to consumers. The report finds substantial variation in the transparency of these Web sites and in the value they potentially offer to consumers.
CONTENTS
EXECUTIVE SUMMARY
- Recommendations to Consumers
Credits
ABOUT CONSUMER REPORTS WEBWATCH
INTRODUCTION
- Key Definitions
The Potential Problems With Alternative Sites
Arriving at Alternative Sites
METHODOLOGY
- Sample
Questionnaire
Data Collection
MAJOR FINDINGS
- Three Basic Choices
Few Actual Sellers
Figure 1: Relationships Among Web Sites
Free Use of the Term “Free”
Table 1: Use of the Term “Free”
Potentially Important Omissions
FACT Act Rights
Table 2: Site Disclosure of FACT Act Rights
Type of Credit Score(s)
Charging and Cancellation Procedures
Privacy and Security Practices
Purchase Experiences
Credit Scores
Cancellation Procedures
CONCLUSIONS
- Best Practices
Recommendations to Consumers
Study Limitations and Remaining Questions
REFERENCES
Appendix 1: Final Credit Report Sample and Search Engine Source
Appendix II: Questionnaire
Appendix III: Interrater Reliability
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