'Free' credit reports sometimes aren't free

SEATTLE -- Like many consumers, Wendy Temple's first step shopping for a mortgage was to go online to get a sense of where she stood as a prospective borrower.

Temple, an accountant, surfed to TrueCredit.com, a popular website owned by TransUnion, one of the Big Three credit bureaus. There she purchased her TransRisk credit score, TransUnion's assessment of her credit worthiness. Temple thought her score — 608 — was just high enough for her to qualify to buy a $207,000 home in a gated community in Holiday, Fla.

"I was so excited," says Temple, who signed a purchase agreement with her fiancé. But not for long. The mortgage company, it turned out, judged Temple, 33, differently. It looked at her FICO score, the assessment widely used by lenders, based on a formula supplied by Fair Isaac. Temple's FICO score was nearly 100 points lower than her TransRisk score. "Needless to say, we had to back out of our contract," she says.

Temple didn't know that TransUnion and the other bureaus are trying to wrest control of the credit-scoring market from Fair Isaac. She had no way of knowing the competing scores differed. But who can blame her? Confusion awaits any consumer who dares tread online in search of a credit score, personal finance experts say. "It's one of the biggest rip-offs you can find," says credit consultant John Ulzheimer, author of You're Nothing But A Number: Why Achieving Great Credit Scores Should Be On Your List of Wealth Building Strategies.

Yet, dozens of websites affiliated with the bureaus falsely imply that they can also distribute the government-mandated free reports. At FreeCreditReport.com, ConsumerInfo.com, PrivacyMatters.com, Free3BureauCreditReport.com and other similarly named websites, free trial offers and package deals abound. The most ubiquitous: pitches for free credit reports and free credit scores if you subscribe to a "credit monitoring" service that alerts you each time a lender checks your credit history, says Robert Mayer, a University of Utah professor who has analyzed two dozen such sites for Consumer Reports WebWatch. "The word 'free' is used so freely that it really has no meaning in the context of these types of sites," Mayer says.

Creative marketing

The profusion of websites hawking credit reports, credit scores and credit monitoring to consumers have one thing in common: They all sell data supplied by the Big Three. The bureaus are the drivers behind a blizzard of consumer promotions for credit reports (a record of how you pay your bills); credit scores (a calculation of your creditworthiness, based on your credit report); and credit monitoring (a monthly subscription service, which credit experts say is of marginal value). Thanks to the Fair and Accurate Credit Transactions Act of 2003, each bureau must supply every consumer with one free credit report a year.