WASHINGTON – Oh sure, anybody can get a free credit report. But there's a world of other information about you out there which goes far beyond that. What's your credit score? Your insurance score? Could you get a good car loan?
Many of those reports are available for a fee, and therein lies the rub. Credit reporting agencies that used to make all their money selling your reports to lenders, now are making some money by selling them back to you.
"The consumer market has been one of our fastest-growing areas," concedes Steven Katz, a spokesman for TransUnion, which has just unveiled a suite of new reports, including home and auto insurance scores.
In part, that growth stems from the fact that more people and businesses are tapping into your credit report and score. It's not just used by mortgage companies, but by potential landlords, employers, insurers and others. Consumers should know how they are viewed by the various businesses they have to deal with, but they can also go overboard on ordering info they may not need.
For consumers, the question remains: Do you really need to buy all of these reports, or does somebody else on the other side of the transaction just need to sell them? How much do you really need to know about yourself, and how much should you pay for it?
Here's a brief overview of some of the report cards you can get and how you should approach them.
— Your credit profile. Everyone is entitled to one free credit report a year from all three credit reporting agencies — Experian, TransUnion, and Equifax. These are available at http://www.annualcreditreport.com. You should take advantage of this every year, to make sure that all of the items on it are correct. If you see any wrong addresses, cards you didn't know you had, or late payments you believe you made on time, set about repairing it. All three credit reporting agencies would have you believe that you had to monitor your report regularly and frequently to make sure mistakes aren't made and your identity isn't being used to open credit cards for scam artists. It's not a convincing argument, but worrywarts who are willing to pay more for peace of mind can find all the reports they'd ever want at transunion.com, experian.com and equifax.com.
— Your credit scores. Beyond your credit report is a credit score, most commonly a FICO score, created by Fair Isaac from information in your credit report. These scores typically range from 620 to 850, and the higher the number, the better. That's a really important number, especially to mortgage bankers, and you can't easily get it for free. If you're already working with a mortgage broker, you can ask him or her to give you your scores. You can calculate a rough approximation of your FICO score at http://www.bankrate.com/brm/fico/calc.asp. Or you can buy a your actual FICO scores for $47.85 at http://www.myfico.com. You'll get three scores; one for each credit reporting agency. It's good to get your credit score a few months before you apply for a mortgage or other big loan, especially if you've had a troubled credit history. That gives you time to fix mistakes, pay off some card balances and clean up your score a bit before you start actually asking for money. And make no mistake, a higher score saves you big money on a big loan. The monthly payment on a $150,000 30-year, fixed-rate mortgage would be $886 for a person with high scores and $1044 for someone with lower (but not the lowest) scores, calculates Bankrate.com.
— Your insurance grade. If you're shopping for a new homeowners or auto policy, it helps to know how you look to the insurers. They often base their decisions and rates on two factors: your credit score and the five-year history of claims filed on your house or car. The latter information is contained in so-called CLUE reports (for Comprehensive Loss Underwriting Exchange), which are created and published by Choice Trust. You can get one free CLUE report a year (for auto and for home) at the company's Web site, http://www.choicetrust.com. It's worth doing if you've filed claims, to see how they are reported. And if you've not filed a claim for five years, your CLUE is probably clean, but worth looking at nevertheless to make sure there are no errors. But here's a complication: If you're buying a new (for you) home, the insurer may base its coverage decisions on the home's CLUE report, not yours. And you're not allowed to order that. You can, and should, ask the seller to provide one.
Insurance companies check your credit reports, too, and the credit reporting agencies are responding with insurance-specific credit scores they say more accurately reflect claims filing risk. You can buy them too, for example at TransUnion's site http://www.truecredit.com/insurance. If you've had a troubling credit report, either because of your own paying behavior or because of errors, it would be worth seeing what your insurance score looks like. But if you've got a good credit score, it's unlikely you'll have a bad insurance score; there is a correlation. It's likely that if your credit report and claims history is clean and your FICO score is solid, you'll be able to buy decent insurance coverage without shelling out extra cash for any special insurance credit reports. You'll need it to pay the premiums.