Many Americans have used free credit reports to see how they are doing financially. It’s not a bad idea to get a grip on your credit. But there is a danger lurking in them too. Tap or click here to see how much your credit card is now worth on the Dark Web.
There is a saying that just because something is free doesn’t mean you aren’t paying for it. Kind of like social media, where it is free to use, but you are the product that generates advertising revenue for the platform.
The same can be said for free credit reports. There is generally an understanding that putting your details in and getting a result is the end of the transaction. But an investigation has found that not to be the case.
Here’s the backstory
Consumer Reports (CR) looked at five of the biggest credit score monitoring companies, and virtually all of them hide a dark secret. They might be free to use, but you are giving away more information than you know. In some instances, credit score companies require way more details than what is necessary to give you a rating.
The companies the investigation focused on are:
- Credit Karma
- Credit Sesame
- Experian Credit Report
- TransUnion: Score & Report
For the investigation, Consumer Reports enrolled in the services to examine their website, mobile apps, privacy policies, and terms of service. It also interviewed 20 users of the credit reporting companies and collected 300 reports.
It’s relevant to note that Consumer Reports’ goal was to “understand what information users gain access to, the type of information that the services collect, how the services share that information, and the cost structure of the services.”
Your information in exchange for a credit report
The five companies provide you with a score from two of the biggest credit bureaus. VantageScore 3.0 is used by Credit Karma, Credit Sesame and TransUnion. FICO 8 is used by Experian and myFICO.
But there is one thing that all five have in common: broad permission to collect data. CR noted that all these services share your information with their affiliates. This is done for marketing purposes or to sell you different products.
The services can also collect data that you didn’t provide them. If you read the fine print, you’ll notice that it states they collect data about users from third parties. Who are these third parties? Well, “local business reviews or public social media posts” is where Credit Karma goes.
“This data collection enables the services to create user profiles incorporating a broad swath of data in ways that might not have benefits to the user and that could be shared with other companies,” Consumer Reports found.
But perhaps the biggest offender when it comes to collecting your personal information is TransUnion.
The investigation found that it collects: names of users, potentially the names of family members, home addresses, billing addresses, email addresses, phone numbers, Social Security numbers, dates of birth, employment information, credit card account information, device identification information, IP addresses, device identifiers, application identifiers, debt details, income range, financial information, driver’s license numbers, passport numbers and utility information. Yikes!
What you can do about it
Consumer Reports makes it relatively clear that the companies are collecting more information than what why need. This is why it usually isn’t beneficial for users to sign up for their services or apps.
Check with your bank or card company to see if they can provide you with a free credit score. Many of them do, and you could make use of AnnualCreditReport.com. You can check your weekly credit score for free as well.
Stay clear of report apps that require a ton of personal data. It might give you a report at the end, but it won’t be completely accurate, and your data will be used for other purposes.
You can read the whole, rather lengthy Credit Not Due: The Limitations of Popular Credit Score Apps report here.