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Free Credit Report vs. Paid Credit Score

One of my New-Year resolutions was to check my credit report and make sure that everything that appears on it was done by me.

Year after year, while knowing that I was entitled to one free credit report per year, I never found the time to send my request in. This year I started in the natural way of asking the people around me what they knew about the free credit reports and NY. My colleagues said that I should be able to request one online by going to a website that was advertised on the radio all the time. I checked it out but it required to sign up for a moth of free service that needed cancellation. I’ve been always wary of the notion “sign up and cancel.” Never a good idea.

All three credit bureaus, Experian, TransUnion, and Equifax, use their own format and come up with a credit (FICO) score. Since the credit bureaus are run for profit it costs money to obtain information from them, especially FICO scores, but under the “Fair and Accurate Credit Transactions Act” they are required to disclose one free credit report per year.

A very important distinction to be made is between credit score and credit report. Using mathematical models and the following factors: payment history, current level of indebtedness, types of credit used and length of credit history and new credit, the FICO score determines credit risk. In other words, the credit score is a numerical representation of the credit worthiness of a consumer (it’s like being a A-list celebrity vs D-list one).

A credit report, on the other hand, is a list of a person’s credit both revolving (i.e. credit cards, LOC) and, installment debt (i.e. car loans, house mortgages) showing details such as payment history, credit limit, term etc. In addition, the credit reports show inquiries done under your social security number. In my case, since I’m not looking to obtain a loan, I was not concerned with what my sore was but only with what’s on my report and that everything showing was current.

In conclusion here is a link that will bring you to a page maintained jointly by the 3 credit bureaus and you can get your truly free annual credit reports; no need for “sign up and cancel”.
Since they all track the same information, a smart tip would be to request the reports from the 3 bureaus spread out through the year . This way you get a picture of your standing every 4 months or so.