Who isn’t satisfied by a good discount—or better yet, a freebie? Most people I know are, which is why information recently published by the Consumer Financial Protection Bureau surprised me. Their report, “The impact of differences between consumer- and creditor-purchased credit scores,” reveals that less than 16 million individual U.S. consumers obtain copies of their credit reports (for free) on an annual basis.
As background, federal law allows consumers to obtain one free disclosure of their credit report in any given 12-month period from each of the three major credit reporting agencies—Equifax, Experian and TransUnion. (Note: You can always obtain a copy of your report directly from the credit reporting agency—this, however, usually costs a fee). The credit reporting agencies, in cooperation with the FTC, created a joint venture company called Central Source, through which consumers can receive their free credit report. You can get your free credit report by phone, mail or online:
Annual Credit Report Request Service
P.O. Box 105281 Atlanta, GA 30348-5281
So why is it important to check your credit report? For one, you always need to monitor for errors and potential fraud. If, for example, you see a line of credit that you didn’t apply for, or if there is a discrepancy in your payment history, you need to notify the credit reporting agency as soon as possible to correct it so it doesn’t needlessly damage your credit. And of course, a lower credit score results in your having to pay more for loans—which is obviously not ideal. Checking your credit can also help keep you on track if you’re trying to build (or rebuild) your credit. (Credit.com also provides a free tool, the Credit Report Card, that essentially grades you on your credit. It can give you a ballpark estimate of your credit score based on a “soft pull” of your credit report—meaning it won’t be reflected on your credit report—however, for an in-depth look at your credit, you should look to your full credit report.)
The Consumer Data Industry Association estimates approximately 30 million free credit reports are delivered annually through Annual Credit Report. When you factor in that many of these consumers are obtaining their reports from more than one credit reporting agency each year through the central source, this amounts to to approximately 16 million individual consumers mentioned above.
While I will concede that the instant gratification associated with obtaining a free copy of your credit report is not on par with tasting free samples at the grocery store, the practice of ensuring the accuracy of your credit profile is more valuable and can potentially save you thousands of dollars over the long run. And it’s likely you can complete the online application faster than it takes to get through the morning line at your favorite coffee shop.