Shedding light on the credit-reporting industry

Your credit score should be included in your free credit report

Published: December 2012

While you might be enjoying holiday-shopping-induced euphoria, it's probably a wise move to check your credit report before you do any more buying. The report will give you a handle on your finances before the morning-after reality arrives—in the form of credit-card bills and a severely depleted bank account. You can get a free credit report from each of three largest credit bureaus (Equifax, Experian, and TransUnion) once a year at AnnualCreditReport.com.

Your credit report—which shows how much you owe on credit cards and your mortgage and other loans, and whether you pay your bills on time—can have a major impact on your life: When you apply for credit, buy insurance, or rent a home, your getting approved and the and the rates you’ll pay are determined by your credit score.

But the credit-reporting industry is notoriously murky and confusing to many consumers, and a new study by the Consumer Financial Protection Bureau attempts to shed some light on it.

The CFPB found that credit-card companies supply most of the account information used to create your credit report. It also noted that fewer than one in five people bother to get copies of their credit report each year. This is troubling, because your report helps you to not only figure out your finances but also to spot errors that a lender might have made or evidence that someone has been running up charges under your name. If you don’t check your report, you might discover the mistakes only after you’ve been denied credit.

This study is the latest effort by the CFPB to take some of the mystery out of credit reporting as the bureau steps up its oversight of the industry.

We welcome the move. An industry that has such an enormous influence on your financial life should be easier to understand, and the information it offers should be more helpful, accessible, and accurate.

With all the information packed into your report, you might expect your three-digit credit score to be included. Unfortunately, it’s not. To get a credit score from one of the leading credit bureaus, you typically have to pay for it. And to make things even more frustrating, another CFPB study (PDF) says the score you buy could be significantly different than the one that lenders use.

Consumers Union is pressing the government to require your credit score to be included in your free credit report. One of our New Year's resolutions is to keep pushing to make credit reports work better for you.

This feature is part of a regular series by Consumers Union, the public-policy and advocacy division of Consumer Reports. The nonprofit organization advocates for product safety, financial reform, safer food, health reform, and other consumer issues in Washington, D.C., the states, and in the marketplace.

See also:

Over the Holidays, You Better Watch Out . . . for Add-On Airline Fees

Gift Cards: Gifts That (Sometimes) Keep On Taking

Meat Without Drugs

No More Bill Shock

Rental-Car Roulette

Zombie Bank Accounts Rise From the Dead and Feed On Your Finances


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