Don’t be fooled by credit score sites

You know the old saying: There’s no such thing as a free credit report. While everyone’s entitled by law to one free copy of their credit reports a year, they must pay to get the all-important credit scores. After our story last week on credit scoring, Jeff Berglund, a vice president for mortgage loans at Washington Trust Bank, wrote to urge readers to be wary of Web sites that promote “free credit reports.” “They should not pay for scores at the ‘free annual report’ sites as they are only ‘general scoring models’ and may be as much as 50 points high, giving them a false sense of scores the mortgage industry or car dealers will use,” Berglund wrote. “The only place to obtain accurate scores is the www.myfico.com Web site. Cost is approximately $48 for a full report which includes actual scores.” Berglund also noted that people can block mailed offers of credit for five years, by going to www.optoutprescreen.com. Another reader, Robin Moseley of Coeur d’Alene, wrote to say that the credit-scoring process can be tough for consumers to understand. A “credit reporter” for 10 years for Equifax, Mosely said people often blamed the credit bureaus – and not their creditors – for negative reports, and may not understand that sometimes their reports might not change as quickly as they’d like. “I also think it is important for consumers to understand that their credit score can be different from one day to the next depending on their credit activity,” Moseley wrote. “When I applied for a home equity loan a few months back, my credit score was 749. I didn’t check, but I am certain that my score was lower the very next day and maybe even that same afternoon, just because of that credit application.” She added, “The Fair Isaac Corp. criteria for determining credit risks are near impossible to understand, even harder to explain and often do not seem fair at all.” *** If you’re looking to start digging yourself out of debt, a lot of advisers suggest something like this: Tighten your budget and put all the money you can toward your debts, starting with the smallest one and moving up the ladder. One way to do this is to write down all your income and expenses – everything – and eliminate enough spending to come up with a “power payment,” financial adviser Hal Young told McClatchy Newspapers. That payment then becomes a new part of your budget, and it goes toward at least one outstanding debt. “The bill with the highest interest rate or the smallest balance is probably the best one to attack,” Young said.