What no one will tell you about your “free” credit report

If your New Year’s resolution includes a financial tune-up, then you’re probably about to pull your “free” credit report. You’ll want to read this first.

No, this isn’t a warning about the credit report scams that litter the internet. You know, the ones that try to convert you to a pricey service after an initial trial period. I’ll defer to our friends at the Federal Trade Commission for the details on that particular ripoff.

This is about the supposedly real deal, the report you can get by visiting Annualcreditreport.com.

When words like “free” get tossed around this much, you’re bound to run into disappointments, and the information you’ll extract from the three credit reporting agencies — Equifax, Experian and TransUnion — is no exception. The numbers can be difficult to access, hard to understand and incomplete. I know, because I just tried to access my own credit reports.

Credit reporting agencies aren’t sending you the report because they want to. The Fair Credit Reporting Act requires these agencies send you the reports during any 12-month period, upon request “and without charge.” But they don’t have to make it easy — and they don’t.

You may not be able to immediately access your information
In order to verify your identity, the credit reporting agencies will ask you a series of questions. For two of the agencies, I passed the test (with some difficulty) but one of them refused to issue the report. Instead, it mailed a letter to my address with a secure link. That makes some sense, except for one small thing. The questions asked by the agency were unanswerable. They asked me to choose between several recent car purchases, none of which I had made.

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It’s confusing
“At first glance a credit report can seem overwhelming,” says Ian Atkins, an analyst for Fit Small Business. “If you’ve been using credit for more than a couple years a credit report can easily run to 20 pages or more.” Don’t be put off. A lot of the information is redundant, showing the same type of information over and over again for each account you have. If you check your report regularly, you’ll learn to skip the repeat information.

There’s no score
That’s right, the most important part of the credit report — your score — is missing. “While these companies will provide each individual with their personal credit report at no charge, the credit score, which is derived from the credit report, is only available for a one-time fee, usually around $8 for each company,” says Josh Alpert, founder and president of Alpert Retirement Advising in Southfield, Mich. Why do they charge for the score? Because they can.

Other information is missing
For example, your credit report doesn’t include anything you defaulted on 10 years ago or more. You won’t find the interest rates you pay on your loans. Nor will there be any references to your race, gender or religion, or information about your political affiliations, criminal records, medical records, and marital status. That’s a lot of missing information, says Salwa Ebrahim, a spokeswoman for Cherry Creek Mortgage Company in Tempe, Ariz. “You have to know what to look for,” she says.

Someone is watching
Another potential shocker: A long list of “soft” inquiries of entities who pull your report for a variety of reasons. “Don’t panic,” says Kristen McGrath, financial expert at CreditCardForum. “Not all these inquiries are affecting your score. Banks pull your credit all the time to prequalify you for offers, and all the free credit-scoring sites you signed up for will as well.” The ones that don’t lower your score use language like “promotional inquiries” and “inquiries shared only with you.” The score-lowering “hard” inquiries will be labeled as “regular inquiries” or “inquiries shared with others.” If the soft inquiries bother you, you can do something to block lenders from soft-pulling your credit for pre-approvals at OptOutPrescreen.com.

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So how did my credit report turn out? Fairly undramatic. I was disappointed to not see my credit score, and like many consumers, I found it difficult to initially understand some of the agency terminology. But then, I’m one of the most financially boring people you’ll ever meet. I’ve lived debt-free for more than a decade, and frankly, my credit score doesn’t matter because I never ask for credit.

But I’m unhappy that the credit reporting agencies don’t tell people what they really want to know — their score. It’s a little bit like going to school but then not receiving a report card at the end of the year. Or, as Robert Siciliano, CEO of IDTheftSecurity.com, notes, it’s like going to the doctor without getting a diagnosis. “A credit report without a credit score is insufficient,” he says.

You can improvise. Experts say you can estimate your credit score at no charge using FICO scores estimator, based on the information you pull from your credit report. In the end, my bank generously allowed me to view my FICO score without charging me. If you must know, my scores are about average.

Something is wrong — very wrong — about the way credit scores are collected and dispersed. My credit report should be available to me jargon-free, without taking an impossible multiple-choice test. If I earn a credit score, shouldn’t I have the right to know what the grade is without forking over more money? And shouldn’t I also be able to see who’s checking my score in real-time, without being charged again, rather than waiting until after 12 months has elapsed?

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Of course. But then, the credit reports were not written for you and, if there were no federal law, the credit reporting agencies wouldn’t fork over a bit of the data without you having to pay for it. It’s not our system. We’re just a product to be graded. Something they won’t tell you when you ask for your “free” credit report — but they probably should.

Should credit scores be included in your "free" annual credit report?

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Christopher Elliott

Christopher Elliott is an author, journalist and consumer advocate. You can read more about him on his personal website or check out his adventures on his family adventure travel site. Contact him at chris@elliott.org.

  • BubbaJoe123

    1. There’s no such thing as “THE” credit score. Your score varies by credit reporting agency (different data sets, so different score), and who’s buying it (most major creditors get a score customized to their particular needs, with different weightings).
    2. The credit score is calculated for lenders – they’re the customers, not you. It’s reasonable that you have a right to make sure the data being used is accurate (and that’s what the free credit report provides), but beyond that, it’s the lender’s call how to use that data.
    3. If you want “A” credit score, there are lots of places to get one for free. Creditkarma is a good one. Most credit card companies (Citi, Chase, Discover, I’m sure others) also provide free credit scores to their customers as a benefit.

    All this said, the bottom line is that the behavior that leads to being deemed a good credit risk isn’t a mystery: people who use credit responsibly (i.e. pay their bills on time) have good credit scores.

  • deemery

    All very good points.

    But if you use credit responsibly, there’s still a lot of black magic in in the last 20-40 points of your score, and that can make a difference on qualifying for the lowest rate, or something more expensive.

    It’s been interesting to compare my score with my wife’s score. Hers is higher, even though I have a few more (car) loans recorded in my name only.

  • David___1

    I recommend adding a credit freeze at all three agencies. It does two key things: 1) it makes identify theft harder. Companies won’t open new accounts without doing a credit check and they can’t get one without you doing a “lift”. It does make it harder, and more expensive – a lift costs about $5 each time, to do new applications yourself, but the protection is worth it. 2) You’ll stop getting the preapproved credit offers. Companies can’t see your report so they don’t know if you qualify.

    Note: The freeze isn’t total. Companies that you do business with can still see your report.

  • llandyw

    I voted no on this one. The reason for the “free” credit report is so you know what’s going on.

    The whole reason for the mandate is so you can look over your report to see if there’s items on it that are old (more than 7 years in most cases) that don’t belong, or accounts in your name that you never opened (fraud).

    It had never been intended as a vehicle for individuals to see where they stood in the scoring.

  • AAGK

    Of course they should show your score and stop asking the verifying questions based allegedly publically available info. If the info is public then anyone could access it and also, it rarely has anything to do with me. I know they throw in a few falsies on purpose but last year I got locked out of all my reports without proof of identity. The reason was I don’t know when someone named Barbara (insert maiden name) birthday. I don’t know any Barbara. I later learned that someone with that name lives in my mom’s building. This is a total stranger but I suppose some genius linked my mom’s address and my mom’s married name, same as my maiden and not her current married name, and decided I know this person. It was ridiculous.

  • Harvey-6-3.5

    I do wonder about the variations. We get a free score from our bank, and it shows us with the highest possible number, but I wonder if other scorers would be so generous.

  • Extramail

    What about the advertisements I see from creditkarma.com that tout giving you your score for free? Discover card is also running an ad saying you can get your credit score for free even if you don’t have a discover card? I’m just curious as to what those “scores” are?

  • BubbaJoe123

    Agreed, there’s definitely variation, but there’s also variation in the credit models that lenders use, so it’s very hard to know with certainty the fine-grained impact of a decision on the score used by a particular lender.

  • Stephen0118

    More and more credit card companies are giving you a credit score for free (although, like BubbaJoe123 says, it varies). Discover, Citibank (credit card), and Quicken (Intuit) gives you your credit score as a side benefit.

  • disqus_00YDCZxqDV

    I downloaded the Citibank mobile app and it shows you what it says is your credit score and even has a graph so you can track how it moved over the past year !

  • BubbaJoe123

    They’re legit credit scores, and they’ll give you a decent idea of how a lender will view your credit. Every lender gets a slightly different score, though, so, as I noted above, there’s no truly “official” score.

  • BubbaJoe123

    There are always variations, but if you’re getting a top score on one metric, you’re probably just about the same place on others.

  • cscasi

    I have had my score vary ten or 15 points in the 810 to 835 range of a top score of 850 and my lenders have never given me less than the lowest loan rate or tried to up my lease rate on vehicles I lease.
    I will say the one thing that they point to (that is the credit scoring agencies) is that I do not have a mortgage. I have had mortgages since the early 1970’s, but we paid our last one off in 2006 and have not had one since. Well, they deduct some points off your score for not having a mortgage. How many; I have no idea. But, it does make me mad to know that I am being penalized because I do not have an active mortgage. Still, I am in the top tier (as is my wife) for FICO scores.

  • JewelEyed

    Credit Karma is pretty great. It’s worth checking out.

  • The Original Joe S

    Hogwash! Who cares what it’s intended for? It’s YOUR life they are messing with.

  • The Original Joe S

    I don’t deal with banks. Most of ’em are thieves. I don’t need credit.

  • BubbaJoe123

    Wait, all three of the credit agencies asked you the exact same identity verification question?

  • AAGK

    I guess 2 of them? I had to send in my driver’s license for 2 bc I don’t know who the heck Barbara x is

  • cscasi

    And if you want credit, that’s the way it is.

  • cscasi

    I got caught with one of those public information questions a couple years back when asking for a copy of my credit report. I lived back east on a street called Monroe Path. Some 20 years later I was asked if I had ever lived on any of the streets listed in the question. The street was listed as Monroe Way; not Path. So I answered none of the above and it locked me out. So, I had to write a letter and send in other information in order to get my free copy of my credit report. Yes, those “questions” can be a pain and a stumbling block.

  • MF

    Interesting lifestyle.

  • The Original Joe S

    I don’t want credit. I have MONEY.

  • The Original Joe S

    Yup. I deal with credit unions. I’m a SHAREHOLDER.
    I dumped my bank when it was taken over by a gang of MoFos, who were out to shaft the customers. I won’t bore you with details.

  • cscasi

    So, if one never uses credit then how can they mess with one’s life?

  • TiaMa

    I have had an issue with one of the credit reporting agencies when requesting mine with the personal information questions. It, too, asked me about a loan I never had.

  • Tricia K

    For the record, even someone who lives a mostly cash, debt free life still needs a good credit score, as it affects the rate you pay on other things you do need, such as your car insurance or apartment rentals. Several credit card companies are making credit scores available to their customers either on their monthly statement or via their online service. Both AmEx and Chase offer it and I’m sure others do as well. I have gotten our credit reports multiple times through the free access offered using the annualcreditreport.com site (the only true free site and it’s the one required by the law you referenced) and have not had any problems, although it does get a little tricky at times given that we have moved several times. I know too many people, my brother included, who live in a world of deliberate ignorance when it comes to their finances. Getting your credit report annually (if you rotate your requests for the free report to about every three months, you can keep an eye on potential identity theft) and your credit score, even if you have to pay for it, is part of being financially responsible, regardless
    of your debt levels. If you don’t plan on borrowing money in the near future for a car or a mortgage, you can freeze your credit for a small fee (I believe the fee is waived if you have had your identity stolen) and make it so no one can open credit in your name. You can remove the freeze later on if you do need to borrow money and then put the freeze back in place afterwards. And the fee (around $10 for each of the three agencies) is much cheaper than a credit monitoring service.

  • Tricia K

    I take a certain amount of satisfaction when I see my score is even a few points higher than my husband’s, especially given that I am no longer employed. I have a higher credit limit on my account than he has on his, and since I take care of our bills, I know the payments are always made on time and the balances are paid off each month.

  • Tricia K

    Have you ever wondered why they give you your score for
    free? It’s not
    out of the goodness of their heart!

  • The Original Joe S

    there’s still a credit report on every serf of our glorious empire. If I need a loan, I talk to the loan arranger at the credit union. Ifa he’sa no there, I talka to Tonto.

  • Mel LeCompte Jr.

    1. “You won’t find the interest rates you pay on your loans. Nor will there
    be any references to your race, gender or religion, or information about
    your political affiliations, criminal records, medical records, and
    marital status.”

    Huh? Do you want your race, religion, gender, etc on your credit report? If it’s on your credit report, it can be accessed by creditors, and that would open up an entire flood of discrimination lawsuits, merited or not.

    2. While trying to rebuild credit, I received an unsecured card from Capital One with a very low limit that gave me free access to my score. As someone with less than perfect credit, I was able to build up my score over the years by using this tool. (I also used Credit Karma, and while the two scores differed, they were always in the same neighborhood.

    3. One item you should have touched on is the dispute system these companies use to challenge potentially erroneous information. Their online complaint system limits your complaint to like 120 characters or so, if I recall correctly. It is impossible to give any detailed information about an error in fewer characters than a Twitter rant.

  • BubbaJoe123

    They market credit card products to you. Nothing requires you to say yes.

  • Sandra

    Don’t know if they has already been discussed and I don’t want to take the time to scroll through perhaps hundreds of responses but…it does need repeating. Chris says his credit score doesn’t matter because he lives debt-free and doesn’t ask to borrow money. I, too, am in the same boat but….I learned from my insurance agency that they use those scores to determine the premium amount on home insurance and car insurance. It seems that if you use credit responsibility you are a better risk on all levels and probably drive more carefully and install smoke detectors! They won’t tell you this if you don’t ask. There are other areas of life that check the credit score and use it to either reward or punish people who buy products such as insurance. Just a heads up; it was news to me.

  • Sandra

    As someone mentioned, the credit score is tied to how much money you owe not only to how timely you are in paying your bills/debts. I have no debt, no mortgage, no car payments etc. I would hope they would look at my credit card bills….big but paid in full each month…and things such as utility and telephone bills. My number is in the 800s but it’s interesting that one is penalized if they are debt-free!

  • JohntheKiwi

    I agree. They provide the actual scores from 2 out of 3 reporting agencies. They make their money by offering credit cards that are appropriate for your specific credit rating. After a month of Credit Karma I actually got a really great card. I also get free credit scores via Capital One.

  • PsyGuy

    I don’t have a huge amount to contribute, I live mostly out of the country, and while my credit score in the US is average, I could not care less about it as it does not effect me. I know people will say “wait it does effect you” and then they will cite obscure reasons that don’t practically apply to me.

    What I do want to add, is that if you want your credit score (and your actual FICO score) for free Discover card gives it to you once a month and you don’t need an account/card with them. You can just register and download the report each month for free.

  • PsyGuy

    I wish I could do that, but in Japan the available banks are all “big” banks. The closest to a credit union is a Japan Post account, which as it sounds is an account you have at the post office.

    I’d love to dump my big bank in the US, but my credit union just doesn’t do a very good job of handling international banking, and transactions.

  • PsyGuy

    Credit Karma doesn’t give you the FICO score, they use a different formula that just isn’t used by lenders.
    As I wrote above, Discover will give you a report each month with your actual FICO score as well as a breakdown of the pluses and minuses that are contributing to your credit score and profile. You do have to register with them and provide them some information, but you don’t need an account or a card with them.

  • PsyGuy

    The information is public but it would be difficult to access that information without access to expensive databases.

  • PsyGuy

    Because many business related life transactions that don’t require credit can still be effected by a credit report and score. The ability to rent an apartment, applying for a job or even a security clearance can be effected by your credit score.

  • Carol Molloy

    Hi, David. Just a couple clarifying points. Anyone can opt out of pre-qualification offers by making that request of the credit reporting agency.

    A credit report freeze will prevent anyone, including current creditors, from obtaining your report. The consumer must provide the creditor with a one-use PIN that permits the report to be pulled.

    The rules for credit reporting agencies and users of credit reports are governed by the Fair Credit Reporting Act.

    The credit reporting agencies have different scoring models. Credit grantors incorporate the FICO score along with experiential data to determine their credit risk appetite. That is a major reason you may be accepted by one lender, but denied by another.

    A credit report does not include data that is prohibited under the Equal Credit Opportunity Act. That explains why race, political affiliation, etc. are not included. And due to recent changes, medical debt is not included in the score calculation. That’s a nod to the particular realities of medical costs in the U.S.

  • joycexyz

    If you live debt-free, they have no idea how you would handle debt if you ever needed to. Things have really changed since the days when being debt-free was admirable!

  • The Original Joe S

    “credit union just doesn’t do a very good job of handling international banking, and transactions.” – Valid Observation.

  • Bill

    I found the same thing … my score was 830 or so until I paid off my mortgage and have no installment debt at all (and pay off my credit cards every month) … and my score dropped to about 790 … and has progressively risen back above 800 but the only negative commentary on any of my credit scores (provided by three of my credit cards, by the way) is that I have no installment debt …

  • Sandra

    I would hope potential lenders would check to see how someone handles their day-to-day “credit” situations, such as paying the electric bill with never a late charge, paying taxes and insurance premiums on time etc. They have access to all that information when you sign the papers to borrow money. It galls me to think that because someone doesn’t owe a ton of money via mortgages or car payments that they are penalized. Joycexyz is correct; things have really changed.

  • bpepy

    I have stopped getting preapproved credit offers by writing “DO NOT SEND CREDIT CARD OFFERS” on the application form and returning it in their postage paid envelope. It only takes a couple of these and, like magic, no more preapproved offers!

  • Nathan Witt

    They’re estimates based on your credit report and updates that the card company pulls periodically. They are not FICOs (in most instances) because getting that number costs a little bit of money. Still, the estimates are pretty good, and are generally only off my a few points. This matters if you’re right on the cusp of a “Tier” of credit that qualifies you for the best rates, but otherwise, the difference is negligible. Also remember that whatever number you see, the score you’d get from a bank offering a mortgage or a car dealer offering financing will be a little bit different, since the score for each industry is customized by the reporting bureaus for their needs.

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