Experian to End Free Credit Reports

Experian, the big credit-reporting company formerly known as TRW Information Systems & Services, will halt its practice of providing free credit reports to consumers as of March 1, the Orange-based firm announced Monday.

The free service, which was launched in 1992 to give consumers one free copy of their credit report each year, is a casualty of abuse and lack of competition. However, Experian and other credit-reporting concerns by law must continue to provide free reports to consumers turned down for credit or facing certain other circumstances.

Experian said it has been inundated by report requests, spurred by credit repair clinics that advise their clients to dispute every negative item on their reports--even when these items are correct. Although these clinics have been labeled consumer frauds and rip-offs by regulators and consumer advocates, they continue to operate, charging often substantial fees to “erase negative information” from consumer credit files.

Accurate information generally cannot be erased. However, credit-reporting firms must investigate any claim of inaccuracy. Because Experian was the only major credit bureau to provide free reports nationwide, it said, it believes it received a disproportionately high number of these bogus requests.

The company has provided consumers with roughly 5 million free credit reports during the last four years, and it estimates that 40% of the requests were spurred by credit clinics, according to company spokeswoman Maxine Sweet. Providing the reports free was not a problem, but investigating bogus consumer disputes was costly, she said.

Additionally, when the firm started the free-report program, it expected that its two main competitors--Equifax and Transunion--would follow suit. They never did. Further, although legislators had threatened to require all credit bureaus to provide free reports to consumers, when the Consumer Credit Reporting Reform Act of 1996 was passed in September, the free-report provision had evaporated. Instead, legislators simply capped the price at $8 per report--the national industry standard--and provided that the price could be adjusted for inflation.

“When introduced, the complimentary credit report was a genuine demonstration of our public commitment,” Experian Chief Executive D. Van Skilling said in a prepared statement. “Today, needs have changed and, increasingly, the cost of continuing the offer has become a significant competitive disadvantage.”

The news came as a blow to consumer advocates, who had long advised individuals to use the free service to check the accuracy of their credit files before applying for major loans. Past studies have indicated that reporting errors are common--some say as many as half of bureau credit files contain errors ranging from innocuous to serious.

“This is really disappointing,” said Gerri Detweiler, author of “The Ultimate Credit Handbook” and a Virginia-based credit consultant. “I think the fact that you will have to pay to check your credit report will keep some people from applying, which means that more people will find out--after they have applied for credit or a job--that there’s a problem.”

However, Detweiler noted that the 1996 federal law, which goes into effect in October, does expand consumer access to free reports in certain situations. Under current law, you have the right to receive a free copy of your credit report if you have been turned down for credit, housing, insurance or employment during the last 30 days based on derogatory credit information. (In addition, a handful of states--Georgia, Connecticut, Colorado, Massachusetts, Maryland, Maine and Vermont--have laws that require credit bureaus to regularly provide free or low-cost reports. But most states, including California, don’t restrict the cost.)

Under the new law, you will have the right to a free report if you have been turned down in the last 60 days. In addition, you will be able to get a free report if you are unemployed and looking for a job, are receiving welfare or believe your credit file contains inaccuracies because of a credit fraud.

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Checking for Free

If You Act Now

You can still get a free copy of your credit report if you act before March 1.

* Write to: Experian-Complimentary Report, P.O. Box 8030, Layton, Utah 84041-8030. Phone: 800-682-7654.

* Include: Your full name, including generation--such as junior or senior--street address, spouse’s name (when applicable), date of birth, Social Security number and previous addresses if you have moved in the past five years.

* Also: Experian requires some verification of your identity and address, such as a valid driver’s license or a copy of a recent utility bill.

If You Don’t

After March 1, requests will need to be accompanied by a check. Because it can become costly to request these reports from all the credit bureaus--and different credit bureaus maintain separate files with often disparate information--consumer advocates suggests you check with a local lender to determine which credit bureau is predominant in your area. Then request the report from that credit bureau. The names and addresses of the major credit reporting firms:

* Experian-Consumer Assistance, P.O. Box 949, Allen, Tex. 75013. Phone: (800) 392-1122.

* Equifax-Consumer Affairs Department, P.O. Box 740256, Atlanta, Ga. 30374-0256. Phone: (800) 685-1111.

* Transunion-Customer Relations, P.O. Box 7000, North Olmstead, Ohio 44070. Phone: (800) 851-2674.