The Cost of Free Stuff (Including Credit Scores)

As the saying goes, the devil is in the details. When a company or individual offers a product or service gratis, think of their free item as compensation for …. something. What is this person or business paying you for? Are they asking for your full name, age, date of birth, mailing address, e-mail address, driver’s license and /or social security number?

If so, stop for a second. Your personal identifying information is valuable, and what you’ll probably get in return is nothing more than endless spam (including snail mail, e-mail, phone calls AND even text messages).

I know this is terribly crass, but think of giving away your personal identifying information as unprotected sex. You obviously weren’t thinking clearly at the time, and now you regret it but can’t take it back.  Maybe you’ll understand the consequences the next day, maybe it’ll come back to haunt you much later.  Or both.

Vulgar analogy aside, sometimes a free product or service is valuable enough to warrant disclosing your personal info. Uncle Sam makes each of the three credit bureaus give you one free credit report every twelve months via AnnualCreditReport.com.  That’s great but you don’t get your actual score, which is what lenders use to determine whether you are a good credit risk.

So how can you get your score without paying for it upfront, and what are the hidden costs?  Let’s compare two popular options:

FreeCreditScore.com is just as misleading as FreeCreditReport.com, but without the annoying sing-song commercials.  It provides your free Experian credit score as part of a one-week trial membership in Triple Advantage, a “three-bureau monitoring service.” If you forget to call within nine days of initial enrollment, your credit card will automatically be charged $14.95 per month.  There are NO refunds.

What do you get besides your score? Triple Advantage provides a $50k “product guarantee,” which will supposedly, subject to some pretty lengthy terms and conditions, reimburse you for up to $50k of expenses you incur due to identify theft.  Is this valuable?  Check with your bank and each of your credit card companies to see what protection they already provide. There’s no sense paying for something you may already receiving elsewhere.

Total cost for one year: $179.40.

Then there’s CreditKarma.com, which touts itself as “a completely free pro-consumer service dedicated to demystifying the credit landscape. With our credit simulators, free credit scores, credit advice, and credit score comparisons, our goal is to empower consumers to more actively manage their credit and their financial health.” You can get your TransUnion score on demand (even daily), with no membership fees or credit card required.

What do you get besides your score? The credit tools mentioned above are pretty useful and the only “cost” of Credit Karma is exposure to score-based targeted advertising.  The ad-supported site has a surprisingly transparent opt-in policy for sharing your personal information. I’ve been using Credit Karma since March and did not opt-in for e-mail offers, so I only see ads in the form of online offers when I’m checking my score. As long as their terms and conditions remain consumer-friendly, I will continue to monitor my credit score using Credit Karma.

Total cost for one year: zip, zero, zilch, nada.  Sweet.

[NOTE:  I'm not an affiliate for Credit Karma and I don't get any sort of compensation or benefit for writing about them or posting links to their site.  I just really like the service they provide. -- AMH]

Photo courtesy of Jesslee Cuizon at http://www.flickr.com/photos/eelssej_/401919914/#/ via Creative Commons license.