Ain't Nothin' Like the Real Thing… But You Should Still Do It

Hey Credit Mama, is that Free TransUnion Score that I can get through the settlement my REAL credit score? --Eric

Well Eric, the short answer is "no." The score you will get if you take advantage of the TransUnion settlement (which provides most Americans with free credit monitoring services and unlimited access to their credit scores for a limited period of time) is TransUnion's proprietary "personal credit score."

As you know from my previous posts and webinars, credit scores are like wines – there are different varietals for different purposes. TransUnion's score is NOT the same score that lenders will see and use to evaluate you for loans.

But there IS a value to the settlement offer. That is, in an age where identity theft is one of fastest growing crimes in the world and that three-digit score means everything, you should know what is in your credit file in order to correct errors (and nearly eight out of 10 credit reports contain errors). It will also give you an opportunity to see how your actions (such as paying down debt or removing inaccurate, negative information) are impacting your score over a period of time.

In addition, it is believed that should enough people take advantage of TransUnion's offer, the monitoring services offered by the other credit bureaus (Experian, of FreeCreditReport.com fame, and Equifax) will be devalued. One of the biggest complaints by consumer advocates was the unwillingness of credit bureaus to include a credit score with the free credit report that they are legally mandated to provide each American every year. Given that credit scores impact interest rates on any type of loan you can get, insurance rates, and even job offers, it is practically a necessity to know what your score is. So far, selling credit scores and monitoring services has been a huge moneymaker for the bureaus – to the tune of $150 million for Equifax alone, an increase of 22 percent in 2007.

According to an article on msnbc.com, consumer advocate Ken McEldowney of Consumer Action "thinks if consumers who sign up for the free offer get an appetite to see their scores for free, perhaps people will no longer be willing to pay for them. The TransUnion settlement will obviously hurt that firm's ability to sell its credit monitoring product, which retails for about $10 a month. But McEldowney thinks it will also hurt sales of similar products by Equifax and Experian, too."

So spread the word… and start checking the http://www.listclassaction.com/ Web site on June 16, 2008.