Free Credit Report – Good or Bad?

by San Antonio Attorney

A credit report is a documented history of your financial dealing including such items as the credit you have available, or have tapped into, and the way in which you have handled the repayments of your debts. Timely and delayed payments are part of the report as well as bankruptcy. Basically, any information that can be gathered about you and the way you handle your debts is gathered in databases and harvested for the credit report.

Credit reports are available from three agencies: Experian, Equifax and Trans-Union. These three agencies have somewhat divergent ways of gathering credit information. Therefore, to get a full picture, it is advisable to get a report from each one.

Checking your credit report is advisable to ensure there are no inaccuracies in it. As a result of the Fair Credit Reporting Act, it is possible to challenge any inaccuracies. This process takes time, but it is worth the effort. Even relatively minor inaccuracies can harm your perceived creditworthiness and need to be put right as they could result in a higher interest charge on credit.

There are some circumstances where you could be asked to give someone access to your credit report, for example, renting a house or taking out a loan. The credit report helps potential creditors to assess the risk involved when providing you with credit. This is done through the credit score that is assigned to you on the basis of the data in the report. In fact, the credit score is arrived at by considering three factors: credit history, debts currently held and available credit. It is the credit score that is used to decide whether or not you are a reasonable risk and will determine, for one thing, interest on loans. Getting a free credit report is relatively easy, in contrast to getting free access to your credit score, and this is the important information. The three credit report agencies are expected to make one free credit report available to you each year, but that does not include the essential credit score.

Although some companies offer free credit reports, caution is called for. Compiling and managing databases of the kind used to amass the information to generate credit reports is a complex business, so the agencies involved expect to charge for sharing this information. Therefore, although a company may advertise the availability of a free credit report, there is a strong chance that a charge will be levied somehow. One way this happens is that you are lured into a credit monitoring program. Firstly, you are asked for your credit card details when you access the site. There will be some spurious reason given. Eventually, you are likely to find that you are paying for this monthly credit monitoring since you failed to act on the obligation placed on you to cancel this service within a few days of requesting your free credit report. This information is not likely to have been made explicit.

A further disappointment is that there is considerable doubt that your credit score will be made available to you in any free credit report generated. So there is good and bad in free credit reports.

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