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Monday, May 25, 2009

Free credit reports are generally not really free

You have all seen the commercials about "free credit reports" with their jingles or catchy sayings. My son, who is only 21 months old, used to stop in the middle of whatever he was doing - playing, crying, eating - to watch the commercials about freecreditreport.com, you know, the ones with the grungy looking band singing a tale about how bad credit ruined their life. People often ask me whether these "free" credit reports advertised on TV are really free.

Unfortunately, they are not. If these "free" credit reports were really free, how would they pay for all the commercials? In reality, you are required to sign up for something (i.e. a year's worth of credit monitoring) to get your "free" credit report. So, unless you want to sign up for something that costs you money, do not use the "free" credit report sites you see advertised on TV.

When the Fair Credit Reporting Act was amended in 2003, Congress mandated that the big three credit bureaus (i.e. Experian, Equifax and Trans Union) set up a website where every consumer in the nation could get one free credit report a year from each of the big three national credit bureaus. This website is http://www.annualfreecreditreport.com/. When you visit this site, it asks for some basic identifying information about you. You then select which of the three credit reports you want to get for free. You can choose one, two or all three, but whichever one(s) you choose, you won't be able to get for another year so choose wisely.

The site then re-routes you to the credit bureaus' websites for the credit reports you chose to get. However, here's where another problem rears its ugly head. Its been reported to me that one or more of the credit bureaus' websites contain arbitration clauses to which you are required to agree to get your Congressionally mandated free credit report. I have already used my free credit reports for the year, so I can not check to see which credit bureaus require arbitration and which do not. However, I find it appalling that consumers are being forced to give away their rights to a jury trial in order to exercise their right to a free credit report. Arbitration is bad because it raises a defense to any lawsuit you might bring against the credit bureaus based upon the contents of the credit reports you receive. A trial is the only place you are on an equal footing with the credit bureaus so you should avoid giving up your right to a jury trial at all costs.

Luckily, there is another way around this. The http://www.annualcreditreport.com/ website also provides a written form that can be completed and mailed in to get your free credit report(s). This form does not include an arbitration clause. Thus, your right to a jury trial is preserved. You can download this form from https://www.annualcreditreport.com/cra/requestformfinal.pdf. You just complete the basic information on the form, fill in the circles for the credit report(s) you want to receive, and mail it to the address located above the shaded box.

Using this form is the only to get a truly free credit report with no strings attached.

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