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Monthly Bills Follow a Free Credit Report

By Faye Mergel
Published: Tuesday, November 3rd, 2009

Federal law guarantees each consumer a free access to their credit report once a year, but many consumers who are misled to a commercial site paid for expensive monitoring services experts say they do not really need.

Monthly Bills Follow a Free Credit ReportPeople can see it on Television and on Internet WebPages, freecreditreport.com ads saying consumers could have avoided financial downfall if they tracked their credit report regularly through their website. But experts say subscribing to the site would only lead to more financial burden since its services are not actually free.

The Federal Trade Commission (FTC) says the site is deliberate luring consumers away from the government-sponsored site, annualcreditreport.com, where they can really get their credit reports for free. Consumers who are misled to the site are paying $14.95 each month for a monitoring service which alerts them of important changes on their accounts with the credit reporting agencies (CRAs).

Because of their ads about free services, revenues of freecreditreport.com rapidly climbed up to $1 billion. Unfortunately, most of its subscribers were not aware of the fees and have hoped that they were really getting free services. Additionally, experts say people do not really need to have their credit monitored every month unless they are preparing for a major loan application or unless they suspect themselves to be a victim of identity theft.

Specialists say the vast majority of consumers do not need real-time updates on their credit report since their status does not change quickly or drastically. Keeping up with bills and checking a credit report once or twice a year is enough according to them. Critics add that paying for almost $15 each month on unnecessary services is a waste of money.

FTC tells consumers that doing a personal credit check do not have to cause anything at all since federal law requires the three major CRAs –Equifax, Experian, and TransUnion—to provide consumers with a free report annually.

Experian has paid a total of $1.25 million to settle charges from FTC that it deliberately misleads consumers who may have been seeking for free reports.

Still, the bureau continues to spend heavily on advertisements to lure Americans who remain worry about their debt standing amid nationwide financial crisis.

In an effort to prevent consumers from being misled, FTC spent about $100,000 to spoof the commercials made by freecreditreport.com. The commission does not have enough funds to launch the video on television but it is hoping that the video could be spread wide enough online so consumers will know which site really offers credit report for free.

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