Every consumer in America has the right to get a free credit report once a year. However, not very many people know this, and the ones that do are often confused about how the process works. As a result, a lot of unscrupulous scam companies have popped up aiming to take advantage of unwary customers. Here’s the truth about the scams out there, how you can avoid becoming a victim of one, and how you really CAN get your credit report for free.

There are plenty of websites out there offering a free credit report. But are these reports truly free? In most cases, the answer is no. If you read the small print on these sites, most of them ask you to sign up for a 30 day free trial of a credit monitoring service in exchange for the free report. You’ll have to give them your credit card number to access the report, and once the 30 days are up, you’ll start being billed for the monitoring service automatically. It’s often very hard to cancel, as these companies don’t make their contact information well-known. Plus, the vast majority of those who sign up for these services forget about them, and are surprised when their credit card statement comes the next month and there’s a charge for $39.95 on it.

The easiest way to avoid the free credit report scams is to avoid signing up with the services that offer them. Nearly all of them are scams, with the exception of the ONE legitimate site for getting free reports. This site is www.AnnualCreditReport.com, and it’s the official site for obtaining your government-guaranteed free annual report. You can use this site once a year to get your credit report from all 3 credit bureaus–Experian, Equifax, and Transunion.

To get the reports, you’ll have to provide some personal identifying information, such as your Social Security number. But don’t worry. The site’s security protocols are strong, so there’s no danger of anyone stealing your identity. You can get the reports directly online, as well, so there’s no waiting period to see them. The only drawback to the site is that the reports don’t come with credit scores. To get those, you’ll have to pay a small fee at the individual websites of the credit reporting agencies.

So, if you want a free credit report, be encouraged by the knowledge that they really do exist! You may only be able to get yours for free once a year, but that’s all most people need to keep an eye on things and make sure all is right in their credit file. By watching your credit, you’ll be able to spot potential problems as soon as they appear and take measures to correct them, which is essential to maintaining your good credit name. 

This is the sixth installment in our credit & debt series. Be sure to check back for updates…

Are you wondering whether or not you should file bankruptcy or explore bankruptcy alternatives? There ARE bankruptcy alternatives, but they may not be right for everyone. In order to decide whether or not you should file bankruptcy, you should first know the main reasons WHY people file, and then learn about what alternative options are available that might apply to your own unique situation.

The Main Reasons Why People File Bankruptcy

1.  They have more debt than they are able to pay back in a reasonable amount of time.

2.  They have more debt than they can pay back at all. In these cases, their minimum monthly payments on all their debts is more than their budget can handle without sacrificing necessities, such as rent and food.

3.  They want to avoid the embarrassment of having their wages garnished to pay back debt, since this would mean their employer would know about their financial difficulties.

4.  They want a fresh start with their credit. While your credit will be damaged for up to 10 years following bankruptcy, you’ll likely be able to start getting low-limit credit cards and small loans again within a year or two, which will allow you to get a new financial start and begin rebuilding good credit. This is attractive to many people who are considering filing bankruptcy.

5.  They realized that filing for bankruptcy will be cheaper for them than paying back their debts.

Bankruptcy Alternatives

1.  Debt counseling services: These services help you consolidate your monthly payments and obtaining lowered interest rates on unsecured debts. Counseling can have a negative impact on your credit, however, and will lengthen the amount of time it takes to pay back your debt.

2.  Debt consolidation loans: You can often get a low-interest loan that allows you to consolidate your debt into one monthly payment. This is convenient and allows you to pay back your debt quicker, and for less interest. However, be careful if you’re using your home equity to get this loan, as you could end up losing your house if you default on the payments.

3.  Debt settlement: You can often get creditors to agree to cancel your debt for less than the amount you owe. This is especially likely if you’ve had the debt for a long time. You’ll be able to settle for cents on the dollar of what you originally owed, but this will usually go on your credit report as having settled for less than the amount due, which can have a negative effect on your credit rating.

Before filing for bankruptcy, you should take all of the above information into account. If you’re able to pay back your debt in a reasonable amount of time, it may be worth your while to contact your creditors and try to work out a more equitable payment arrangement that will allow you to repay them without breaking your budget. Your credit will rebound much more quickly this way than if you declare bankruptcy. Once your creditors are paid, you can sometimes even get them to take the debt off of your credit report entirely, which will boost your score even more. A good credit score is important, as it allows you to get the best interest rates on mortgages and car loans, and can help you qualify for good jobs in the future (yes, employers often check credit reports before hiring). If you feel one of these bankruptcy alternatives is right for you, it’s a good idea to try them first.

 This is the second installment in our bankruptcy series. Be sure to check back for updates…