Purchasing Credit Information
There are a variety of ways to get free information from others. However, you have to qualify, and you might not qualify. Annual credit reports from each credit-reporting company are extremely helpful, but a lot can happen at one of these companies in a year. Therefore, you might consider purchasing credit information so that you're even more informed.
3-in-1 Reports
Some people pay for credit reports because they like 3-in-1 reports. These reports consolidate the information from all three major credit-reporting companies. This saves you the trouble of getting the three reports yourself and then matching up all of your accounts.
Because 3-in-1 reports are fairly inexpensive, if you're really curious about your credit they might be worth it. One reason to pay for them is that you get a better idea of what lenders see when they look at your credit. Lenders often use 3-in-1 reports because not every account shows up at every credit-reporting company. Data from the different sources is merged to put everything onto one sheet. You might be surprised at how the merging works, or doesn't work.
FICO Scores
Along with your different credit reports, you can purchase your FICO score from each of the major credit-reporting companies. Because each company has different information, they'll end up spitting out a different FICO score. You never know if a lender is only going to use one or two FICO scores in the lending decision, so you'll want to make sure they're all good. You can easily have a difference of fifty points among credit-reporting companies. By knowing the score, you can see if anything is really hurting or helping one of your FICO scores.
Paying for Protection
There's a right time and a wrong time to pay for your credit information. If you've got an ordinary life and you're careful about your personal information, you might not need to pay a cent. However, plenty of situations arise when you'll need to watch your credit like a hawk.
If you've had problems with identity theft or fraud, one or two credit report reviews each year is not enough. You'll want to consider a credit-monitoring service, and manually review your credit reports periodically. If you haven't had any problems with fraud but you're really worried about it, go ahead and pay for a service — the peace of mind is worth it.
These days, your Social Security Number is everywhere. It is considered to be one of the most sensitive pieces of data, but is not treated that way by most organizations. You might find your Social Security Number on your paycheck, as your student ID (in college), on contracts that you sign, on a variety of employment documents, and, of course, on credit applications. Think of all of the people who can get access to your Social Security Number. If there are a few too many of them, you might benefit from paying for help.
Pay for Peace of Mind
Another time to pay for credit information is when you're considering a large purchase. Mortgage loans in particular tend to be large loans, so it's worth it to make sure your credit is as clean as possible. A slightly higher rate on a mortgage can cost you thousands over the years, so a few dollars to review your credit information is money well spent. Make sure you get your credit information well in advance of the day you apply for the mortgage — it can take a few months to find, fix, and follow-up on errors.
As you shop for an information provider, make sure you are buying your FICO credit score. Because of the FICO's dominance and history in the marketplace, lenders typically use that score. For a purchase as important as your home, you want to look at the same score your lenders will look at. There are a variety of places that offer to sell FICO credit scores, including the consumer site of the Fair Isaac Corporation,
