How does Freecreditreports.com get the information of ones credit report?

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Clarification of Question by thomask_sf-ga on 27 Apr 2002 15:56 PDT

I am trying to find out how the system works behind the company ... 
Do they just ping the credit agencies every day or do they have
contracts in place with them, etc.
Thomas

There are many companies that offer to check your credit report for
you. FreeCreditReports is one such company. Complete details of how
FreeCreditReports.com works can be found in the FAQ on their website:

http://www.consumerinfo.com/cic/faq.asp?sc=11000000&af=&br=&cl=01XX

Essentially, you are hiring them as your agent to request a monthly
disclosure of your Equifax credit report. The only thing "free" about
their service is that they provide your first report for free after
which you may cancel your subscription to their service. Nominally,
they sign you up for a year's service, but you can avoid being charged
by canceling within 30 days of signing up (i.e., after one
report--like canceling a magazine subscription after a free issue). Of
course, it is your responsibility to remember to do so--they get your
credit card number up front and will charge you if you don't cancel.
When they request your report, they automatically check for certain
suspicious conditions and report them to you.

If you want reports from all three credit agencies, the same outfit
can order them for you, but as a separate transaction for a separate
fee.

Note that if you have any reason to suspect a problem in your credit
file with any of the three credit reporting agencies (Equifax,
Experian, TransUnion), you are entitled to a free report anyway, even
though in most states, you are no longer entitled to free reports just
out of curiosity. Depending on which state you live in, you may have
other rights as well. For more information, and details on obtaining
information on your credit report directly, contact information is as
follows:

Equifax
P.O. Box 740241
Atlanta, GA 30374-0241
(800-685-1111)
Website: www.equifax.com

Experian (formerly TRW)
P.O.Box 2104
Allen, TX 75013-0949
(888-397-3742)
Website: www.experian.com

Trans Union Corp.
760 W. Sproul Road
Springfield, PA 19064-0390
(800-888-4213)
Website: www.tuc.com

For a general introduction to how the credit card industry and credit
reporting works, see the tutorials at BankRate.com:

http://www.bankrate.com/brm/green/cc/ccintro.asp

I hope that clears up your confusion!

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Request for Answer Clarification by thomask_sf-ga on 27 Apr 2002 20:10 PDT

David,

Thanks for the answers, but this is not really waht I was looking for.
 I know/understand all of the info you gave.  My question is about the
system 'behind' the company.

In their FAQs they say:
>>>>>>
Although Experian used to offer one free credit report annually to all
consumers, there is no legal mandate for the offer, and the credit
bureau discontinued the practice as of March 1, 1997.

By Federal law, you are entitled to one free credit report per year
directly from a credit reporting agency only if you certify that:
 
 
you are unemployed and seeking employment in the next 60 days.
 
 you are receiving public assistance.
 
 you believe there are inaccuracies in your report due to fraud.  

Also, if you are denied credit on the basis of information in a credit
report you are entitled to a free copy of your report from the credit
bureau that supplied the credit report.

Residents of Colorado, Maryland, Massachusetts, New Jersey, and
Vermont are entitled by state law to one free report from a credit
reporting agency per year. Residents of Georgia are entitled to two.

>>>>

If you are a member of their service, you can request a new report
every day ... So how do they get around the payment to the agencies? 
I know that if you have been denied credit you can ask for a free
report.  Do they use that lookhole?
So, my question is - how do they run a system in which you can get a
report every day (if you want) and still make money.

I hope you can help me with this.

Thomas

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Clarification of Answer by drdavid-ga on 29 Apr 2002 10:20 PDT

Maybe I'm missing something that you can point me to! I don't see
anything on the web site that says you can "request a new report every
day." As I read it, you can access your report every day, but they
only request a new credit report from Equifax (and Equifax only) on a
monthly schedule. That would be 12 reports for their $80 fee--about $7
apiece. If you ordered the same 12 reports from Equifax as an
individual, they charge $9 each. I presume the rates are significantly
cheaper for businesses checking many customers' credit daily, although
those rates are not posted on the Equifax website. Therefore, as long
as ConsumerInfo can check the Equifax credit reports for substantially
less than $7 each, they can make good money.

Likely those firms won't make money if you make unlimited (or in this
specific case, even daily) requests. Most firms that offer unlimited
access assume that you won't actually use it that much. As one
example, there isn't a single dial-up ISP that will make money if you
are on-line all the time yet they offer unlimited access. The same is
very likely true of these credit reporting firms.

Not to mention that with all those inquiries to your report (a red
flag for creditors), your credit rating will inevitably suffer. It is
best to try to keep inquiries away from your report and to limit your
own personal inquiry to once or twice per year.

The way it basically works is anytime you apply for credit, it will be
reported to one of the main 3 credit bureaus.  They will record your
starting balance, balances month-to-month, and if you ever missed a
payment or filed bankruptcy.  This is also true for any loans you have
made or applied for.  Within the credit report you will also find who
has obtained a copy of your credit report, and promotional inquiries
made to your report -- these only receive your name and address, so I
have read.

The reporting bureaus most likely get most of their money from anyone
that can approve a loan -- especially a car or home.  It is used to
establish credit through credit cards, and even some employers will
check your credit rating before hiring you.

I obtained my credit report from the main 3 credit bureaus through the
web, along with my credit score.  The top 3 allow you to submit
corrections, free of charge online if any appear.  I did have errors
on 2 of the 3 reports, mainly credit cards that had been closed, but
were still marked as open, and I was able these corrected within a
couple of weeks.  I also called the nationwide pre-approved credit
card Opt Out line so I would not receive credit card applications
through the mail (1-888-5-OPT-OUT).  This is one of the top ways
Identity Thieves will steal your information -- they will obtain one
of these in your name, fill it out to a different address and send it
in, and receive a credit card in your name.  Obtaining your report
will allow you to find any credit cards you do not recognize.  Also,
the credit report from each company will contain varying information,
such as portions of the account numbers, the dates each inquiry was
made and more detailed information such as the balances and address
information for each of the inquiring companies.

There is also a fourth, lesser know credit reporting bureau called
Innovis.  I also obtained my credit report from them.  More info is
available here: http://www.creditinfocenter.com/pressreleases/Innovis.shtml.

Best of Luck!

Gambo

This statement from plyons-ga is incorrect: "Not to mention that with
all those inquiries to your report (a red flag for creditors), your
credit rating will inevitably suffer."

Checking your own credit report online registers as a "soft-inquiry"
and does not harm your credit report. Only when a creditor or lender
checks your credit does it create a damaging "hard-inquiry"