Victims looking to get a free credit report often get their identity stolen. Consumers must be sure to deal with a reliable company.

The specter of identity theft and cyber malfeasance can loom large over a person’s credit score for decades. While you may have been able to recover your funds after an erroneous transaction, your credit report may still reflect the missed payments and criminal activity perpetrated by a cyber criminal. In other cases, the credit report itself may be hijacked and misrepresented to prevent you from obtaining a loan. Regardless, you should keep abreast of their current credit situation to make sure your records are accurate. Many free credit reports are offered online which quickly allow you to monitor your credit status. However, some free credit report providers are scam companies hoping to steal your credit information rather than report on it.

How to Check Your Credit Report Free

Under the Fair and Accurate Credit Transactions Act (FACTA), all individuals are entitled to a free credit report from any of the three major bureaus. The three agencies, Equifax, Experian, and TransUnion must provide a copy upon request every 12 months. The individual can request the report through one of three channels, phoning toll-free at 1-877-322-8228, going online at annualcreditreport.com, or completing the free credit report request form and mailing it to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.

Free Credit Report Scams

AnnualCreditReport.com is the only website on the internet federally mandated and authorized to provide credit reports to consumers. Any third party site that offers a free credit report is typically a scam site hoping to retrieve social security numbers and other pertinent information. Users should also be aware of impostors who attempt to take advantage of typos and common misspellings of the URL.

Credit Inquiries and Credit Score

Contrary to popular belief, using the free credit report service does not lower your credit score, as it constitutes only a “soft” credit pull. This is in contrast to lenders who may trigger a “hard” pull which directly affects your credit standing. The free credit report score also differs from FICO, the three-digit number lenders use to gauge your overall loan worthiness. However, the standard credit report score is taken into account by the FICO formula, making it a vital piece of your credit qualifications.

Mortgage refinancing is a way to liquidate the value of your home for other expenses.

Mortgages provide homeowners with a flexible loan that can be refinanced or swapped to take advantage of lower rates.  Mortgages can be offered in fixed or variable rates over extended periods of time. When medical bills or educational expenses arise, a mortgage can also be used to take out a home equity loan, where the value of the house is used as collateral.  Due to the pliable nature of a mortgage, individuals are constantly in the market for new lenders and more affordable rates. Unfortunately, this market also attracts fraudulent businesses who prey on homeowners with bad credit in dire need of refinancing.

Mortgage Refinance

The common mistake homeowners make when they refinance mortgage loans is assuming the new rate is locked in. Often times lenders provide extremely discounted rates that can be revalued later on.  Homeowners should demand that any refinance contract provides prior notification before new rates are locked in.
In addition to misleading interest rates, scam artists often use mortgage refinancing as a tool to ensnare desperate lenders.  Those with bad credit are particularly vulnerable, as they have few other options for financial assistance.  The scam artist offers to take over the loan with a lower interest and monthly payment in exchange for an upfront processing fee.   Homeowners sign up for such offers only to find no payment was made to the lender months after being deceived.

Home Equity Loan

While the burden of a second mortgage may be difficult, medical, educational, or emergency situations may arise where such hardship is necessary.  In order to alleviate this burden, some companies will offer money under the guise of a low interest, home equity loan, when in fact the money is handed over in exchange for a percentage ownership of the house.   Make sure you verify that any documents you sign clearly state the house is offered as collateral only. While there are some reputable organizations that do offer cash for a small percentage of future appreciation, these companies do not charge interest and have no control over when you sell.

Credit cards are a great way to help with cash flow, but be careful with interest rates!

Credit cards can be a convenient way to make quick purchases and bundle expenses into a single bill. They also serve as small loans in times of need. However, as long term loan vehicles they can be poor options, due to astoundingly high interest rates and an abundance of fees. While consumers are aware of this fact, many are forced to use credit cards to hold off payments due to loss of employment, medical bills, or other financial hardship. Credit cards also tend to have more lenient lending criteria, allowing those with bad credit to secure loans they would have otherwise been denied at a traditional bank. For these individuals, credit cards are the only option. Nevertheless, not all credit cards charge stifling interest rates. In order to attract new customers, many companies offer special rates, such as 0 interest credit cards for the first year with no annual fee. While these cards tend to come with the usual trappings, knowing the rules can help you take advantage of the benefits and avoid paying additional fees.

The Credit Card with 0 APR

Some credit companies provide APR 0 credit cards for large purchases or the first year of use. However, generally this 0 percent interest only applies if you pay for the item within the time frame specified. The actual interest is banked in a separate account, and will be charged in full if you pass the deadline. In order to ensure you fail to reach it, some companies will deliberately apply your payments to the most recent purchase, while older purchases go untouched. When signing up for 0 interest credit cards, make sure to confirm in what order payments are applied.

Store Cards

Typically most stores will offer a card with promotional rates for purchases made at that store. If you are a frequent patron of a particular place, you can reduce rates significantly by doing a store credit card apply.
Balance TransfersBalance transfers can be an excellent way to lower your interest payments. However, it is important to keep in mind the APR is equal to the interest plus the balance transfer fee percentage. For example, if a balance transfer fee is 10% and the interest is 2%, you are in fact paying 12% interest on the money, with 10% up front. In addition, once the promotional period expires, that rate will climb significantly.

It is helpful to consolidate loans, but you should be aware of scams.

When the weight of educational, business, or credit card expenses becomes too oppressive, individuals often choose to take out personal loans in order to lower or consolidate monthly payments. For persons with bad credit, often times this requires seeking financing from less than reputable sources. Scam artists use this situation to their advantage, offering secured loans that force individuals to put up collateral as a result of their credit history.  Others will claim to provide unsecured loans but insist on processing fees in order to expedite the loan process.

Consolidation Loans

These types of loan companies offer to negotiate with credit card companies to lower fees and consolidate your balance into a low monthly payment. However, many of these companies will charge a hefty commission or provide adjustable rate loans that escalate over time. When finding a lender, be sure to check what type of loan you are receiving, and calculate how the fees and interest compare to the rates offered by your credit card.

Secured Loans

Those with bad credit can still receive a sizable loan if they are willing to put up some collateral in exchange for the increased risk. With secured loans, customers have the advantage of negotiating the terms of the agreement and the interest. In some cases, you may use the item you are purchasing as collateral, or separate investments such as stocks and bonds.

Beware of Scam Loans

Scam artists promise to process a quick and easy loan for individuals with bad credit in exchange for a processing fee or collateral. They may claim that a third party insurer is guaranteeing a return to the lender, thus absorbing the risk. Once they collect your credit card information, they will charge the account and never deliver the loan.
There are a variety of reputable loan services available on the internet. However, each organization should be approached with caution. Always check a business with the Better Business Bureau or reputable ratings organization. Refuse to pay any processing fees, as a legitimate business aims to profit from the interest earned on the account.