Credit is probably the subject that sparks the most interest and questions from students of those that Financial Beginnings teaches. Students are intrigued by the possibilities of credit and also scared to death of it. With credit affecting so many parts of our lives now it’s no surprise that the students would be scared of it. Someone’s credit not only effects if they can get a loan, but it can also effect if they get a job or even how much they pay on their car insurance.

One of the biggest misconceptions students have is about the free credit reports. When I ask them where they go to get a copy of their free credit report they all break out in song singing “Freecreditreport.com”. They are so sad when I tell them that it in fact is not free. But man that jingle is catchy so you have to give credit to the marketing agency.

I then have to teach the students that the federally mandated free credit reporting site is www.annualcreditreport.com . Several years ago Congress passed the law requiring the three credit reporting agencies to provide consumers with a free copy of their credit report once a year to consumers. The unfortunate thing is that the credit score is not free and consumers have to pay extra for that. I usually recommend that consumers pull one of the three bureaus every four months (i.e. Trans Union in January, Experian in April and Equifax in August). This allows consumers to continually have a pulse on their credit. Obtaining the credit score really isn’t necessary unless you are getting ready to get a loan and want to find out before applying.

Consumers can also get a free copy of their credit report if they are denied credit. I always recommend that consumers do this because there may be a mistake on the report that caused them to be denied.