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Scam Alert: When Credit Reports Aren’t Really Free

We’ve all seen the commercials. That oddly cute pirate-guy-sans-bike singing about sad circumstances that led him to be in his current shabby living situation due to his poor credit score. It sounds like it’s a free service, right? I mean, it says it right there in the song. The dude even spells it out (“F to the R to the E to the E to the C to the R to the E-D-I-T”); why would he lie?

But an article in The New York Times this week claims that not only is Mr. FreeCreditReport.com lying about his service’s lack of fees, but many, many other companies are profiting from the credit report monitoring service charge business. One such company, Experian, which owns FreeCreditReport.com, has paid over $1.25 million to the government over the past five years to settle charges of false claims regarding “free” reports. The government has even launched a series of counter ads to attack Experian, which can be seen at FTC.gov/freereports.

According to Edgar Dworsky, founder of ConsumerWorld.org and a former member of Experian’s consumer advisory panel, you only need to check your credit score about every four months -- anything beyond that ventures into paranoia. The government requires the three major credit bureaus -- Experian, Equifax, and TransUnion -- to provide one free report annually to consumers. Unfortunately, these bureaus saw a chance to capitalize on the growing insanity over identity theft, the need for mortgages and loans, and other consumer concerns about credit, and they were able to induce customers to pay nominal fees to receive monthly credit report monitoring.

If you’re worried about falling prey to one of these “free” credit report scams, The Times has a great interactive piece about all the major credit bureaus, their credit report sites, and whether or not they are actually free. We recommend sticking with the government’s own site, AnnualCreditReport.com, and taking the FreeCreditReport.com commercials for entertainment value only!

-- Lauren Le Vine

See More: Money , Money Q&A , Credit , Credit Cards