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The Logic behind Free Credit Reports

By Ruth Racey
Published: Friday, September 4th, 2009

Any American who has felt the sting of having a bad credit history knows the value of a reliable credit report. Having a well-maintained credit score could mean the difference between continuous credit and rejected applications. Even the federal government knows the importance of an accurate credit report to cardholders and consumers in general.

By law, the three major credit bureaus, Experian, Equifax, and TransUnion, should supply Americans with free credit reports at least once a year. The Fair Credit Reporting Act (FCRA) that was passed in 2003 by Congress requires these credit agencies to provide consumers the information they require to monitor their credit scores and histories.

On the internet, these three credit bureaus supply the cardholders’ credit information through several websites. These sites website authorized by the government to interact with consumers directly and issue relevant data provided by the credit agencies.

Of course, this has resulted in the appearance of dozens of sites offering free credit report services. As more and more Americans are becoming more conscious of their credit standings, various websites have sprouted across the World Wide Web, offering free credit reports.

Their marketing strategies and advertising gimmicks have a tremendous impact on the psyche of many consumers. The use of the word “free” alone can reel in thousands of eager cardholders. These particular sites often provide reliable services for cardholders keen on keeping track of their credit scores.

Credit reports are important for card issuers and banks to assess whether a consumer is worthy of more credit. These reports provide creditors with the essential information needed to come up with decisions regarding new applicants. Financial institutions can also examine existing accounts closely using the data provided by the credit agencies.

A good credit score and history will go a long way for many Americans in dire need of credit. Plastic has become a necessity that many consumers cannot do away with. Reputation plays an important role in the credit industry. Cardholders who have thousands of dollars in debts can expect lower credit limits and higher interest rates. Availing of services that offer credit reports can help many consumers keep tabs on their spending habits and finances.

The cardholders’ spending habits and behaviors are also reflected in credit reports. Card companies and banks consider particular purchases and services as forms of escapism or extravagance. Buying these products or services could mean lower credit lines or a higher interest rate. Card issuers can also refuse to extend credit to consumers fond of buying similar products.

Purchasing credit reports can also help cardholders identify potential errors that can affect their credit scores adversely.

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