Who Pays For Your Free Credit History Reports?

Ads for free credit history reports proliferate on television, radio and the internet. But are they really free? And if they are free to you, who’s paying for them? The following information explains where your credit report comes from, why you get a free copy and who’s bearing the cost that good deal.

Who Has Your Credit Report?

If a credit history report is about you and your actions, shouldn’t it belong to you? Well, no. Three primary credit reporting bureaus - Experian, Equifax and TransUnion - maintain a record of all borrowing you do, reported to them by lenders. It also contains any negative activity such as late payments; an account closed and charged off; or a legal action such as a foreclosure, bankruptcy or lien.

How the Reporting Bureau Pays

Federal law found in the Fair Credit Reporting Act requires credit bureaus who maintain records to allow you one free credit history report each year. So, on the surface, it appears the credit reporting bureaus pay for the free report.

The only government-sanctioned web access is through www.annualcreditreport.com. 

The credit bureaus can offer their own access as well through similar sounding web site domain names. In one case, by accessing your report through the credit bureau’s site, you are offered an opportunity to buy additional services along with the free report. It’s a way of offsetting the expense of the free report to the bureau.

How Your Lender Pays

When a business offers a free service, it often is pricing the cost of that service into the products it sells. The credit reporting bureaus that offer you a free credit history report are also authorized to sell that report to any business that has a legitimate relationship with you. This can include banks and credit unions; car dealers; landlords; and insurance companies. By filling out an application in which approval is based on your credit standing, the company issuing the application, pays the credit bureau and accesses your report.

The free credit history you get is being paid for in part by the sale of your report to third parties, or to you. You can buy a copy of your report as well if you need it and have already used your free annual look.

How You Pay

The cost of doing business for banks and other lenders includes running credit checks on you. As stated above, the credit bureau builds the expense of your free credit history into its fees. Similarly, lenders build the expense of getting your credit report into the cost of its loans. Ultimately, if you borrow, you’re footing the bill for your on free credit history.

Get Your Money’s Worth

Your credit history contains valuable personal information about you and is used in calculating your credit score. The primary way to get your money’s worth out the trickle-down costs of the free credit history is to access it every year. Armed with that information, you know what lenders know and are in a stronger position to get the best loan terms you can.

View all 3 of your FREE Credit Scores

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