No Debt Plan

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AnnualCreditReport.com lets you check your free report from one of the three credit bureaus every year. If you stick to a set schedule and only check one at a time, you check a report every four months. Utilizing this strategy is an effective way to keep a consistent check on what is going on with your report. Granted, it is not a guarantee something won’t happen in between your reports, but its better than waiting a year.

We’re using this strategy and the last time I ran a report on each of us was January 1st. Four months later, and it’s time to check again.

We use this schedule, and I recommend you do too. I’ll be writing about it every four months to remind you, so why not?

• January 1st
• May 1st
• September 1st

And, and never use that free credit report.com website. I won’t link to it, but they sign you up for monthly payments of $14.95 per month. That’s $179.40 for something you can essentially do for free.

I believe in good debt namely housing and in some instances higher education. As I’ve said before, I am not a complete anti-debt guy. I don’t believe in using cash to buy everything. Good debt, like bad debt, requires a credit score. There are several different ways to find out what your credit score actually is. Some credit card companies will tell if you call. If you are buying a house, the lender may reveal it if you ask nicely (ours did). However, they most likely will only tell you what your number is with one bureau. Perhaps they will give you all three; even so, it is only for when they ran your last credit check. The easiest way to be absolutely certain you know your score is to buy it from one or all of the credit bureaus. Don’t be fooled by some websites that offer “free” monitoring up front. You’ll end up getting dinged with a hefty monthly charge. I do support one site that will give you the honest truth about your credit score and report: myFICO.com. They give you the ability to get all 3 FICO scores and credit reports. There is a charge involved, but you should expect that. You have a couple of options that I can recommend to purchase through this legitimate website:

• A 30-day free trial that will get you a credit report and credit score from Experian.
• “FICO Credit Complete” ($47.85) which gives you all three credit reports and scores from the three different credit bureaus. This option also lets you dispute credit errors through myFICO, although you can dispute with each bureau individually for free.

Also, if you purchase before May 1, you will also get 25% off FICO credit scores & reports. That brings down the cost of the Credit Complete to $35.89. Let me remind you that you can get your credit reports for free from AnnualCreditReport.com. There are some instances where you need to know what your credit score is right now. Maybe you are about to start car shopping and can’t pay cash for a car. Since you will be financing, your credit score can affect what interest rates you are eligible for. Maybe you are about to lock in on a 30 year fixed rate mortgage. A lower score can push that rate up as well — and that’s a long commitment. Avoid anything that offers you free credit monitoring. It simply can’t be truly free. “Credit repair” sites are also most likely a scam. I do support myFICO. If you need to know your score, use them to get all 3 FICO scores and credit reports. And remember, if you purchase by May 1st, the price is 25% off.

Stick around, later today I’m going to tell you how I earned money with toothpaste.

After listening to the annoyingly catchy commercials and radio jingles, I began to wonder if it was a stand alone company. I won’t link to the website because it offers a ’service’ that you can get for free.

However, if you visit the About page, you quickly learn that this is not a stand alone company. The website is owned by a company that was setup by Experian. Experian is one of the credit bureaus.

When you think about it, it’s a genius play. The US government tells the credit bureaus they have to allow consumers access to one credit report per year. To offset the cost of this (and to make additional profit), Experian sets up a for-profit website that offers essentially the same service for a monthly charge. Sure, there may be three people in the United States that can honestly need to spend $15 per month to have consistent access to their reports. The average consumer, not so much.

On top of that, Experian’s commercials for the website, and obviously the name of the website, make it seem like a free service. That seems like a scam to me. It isn’t a free service. The first month is free, then those pesky monthly payments begin.

This also explains how a single website could run a bunch of expensive radio and TV commercials. I can’t attest to the profitability of that company within Experian, but I’m guessing there are a lot of people out there that are signed up and don’t even know it. So don’t use free credit report.com. Instead, use the actual free service from Annual Credit Report.com. You can also check out Master Your Card’s 5 steps to a DIY “Life Lock”.

It’s 2008 - a New Year. I keep a loose schedule of financial tasks I need to complete throughout the year. At the top of the list for early January is checking your annual credit report.

A credit report details out all accounts involved in your personal financial life. These reports are utilized in determining whether or not you are a credit risk for a loan (car loan or mortgage). It details all of your personal information (address, employer, spouse, etc.), as well as what inquiries have been made toward your name. Inquiries are usually fine — it is just credit card companies checking your report; this helps them determine on whether or not to send you a pre-approved letter in the mail.

Let me emphasize: I am not a fan of consumer debt, car payments, and risky sub-prime mortgages. Debt is usually bad. However, there is a use to credit. I’ll discuss this in later posts. To get useful credit, you need an accurate and ‘good’ credit report.

With a report this important, you would expect the three credit agencies (Experian, TransUnion, and Equifax) to have everything down just right. Think again. Credit report errors are reportedly pretty common. You always think, “Yea, but everyone else’s report is incorrect. Mine is spot on.”

Well, that’s what I used to think, too. I checked my report and discovered several errors that I had not caught before. My address was incorrect - we just bought a house this year. My employment information was incorrect - I switched jobs in 2006! Even the spouse information was incorrect, in a somewhat humorous way. My Mom was listed as my spouse because she co-signed on my first car loan when I was 17. Needless to say I put a dispute report in very quickly.

Disputing is a relatively easy process. You can always call a customer service rep with your dispute; I sent mine in online. Within a few days I had an e-mail reply saying my information had been changed. It took maybe 10 minutes of time, but now I know my report is accurate and complete.

We also checked my wife’s report. We discovered several errors - her address was incorrect, and I wasn’t even listed as her spouse. We’re getting this cleared up, too.

Note: I recommend using AnnualCreditReport.com. This is the free service that the credit bureaus offer. You have to pay extra to receive your credit score, but cleaning up your report should suffice. I do not recommend freecreditreport.com. That site is designed to get you to pay a monthly fee to monitor your credit. This is unnecessary. Simply monitor one report from each agency every 4 months. (January 1, May 1, September 1).