Because of consumer rights legislation, all consumers are entitled to a free credit report every year and for up to six weeks after being rejected for a credit-card application. There are many websites that promise to give you a free credit report; however, many of these Internet-based services charge for their services. Annual Credit Report is the only Federal Trade Commission-licensed and government-backed free credit report agency.

Because many consumers felt that they had no direct control over their credit scores, many consumer's rights advocates began asking for consumers to have direct access to their credit reports so that they could understand why they may have been declined for a loan or credit card. Consumer's rights groups also argued that consumers needed access to their credit reports so that they could demand fair interest rates based on their knowledge of their credit history. Because of these arguments, the Federal Trade Commission (FTC) amended the Fair Credit Reporting Act, which requires each of the nationwide credit reporting companies, Equifax, Experian and TransUnion, to provide free credit reports.

There are several benefits to checking your free credit report every year. First of all, your credit ranking can give you some idea of what kind of credit cards or loans you may qualify for. Having access to your free credit report can also make you more competitive when applying for a home loan, and can give you leverage in terms of deciding interest rates and down payments. Free credit reports can also help you spot identity theft.

You are allowed to view a free credit report online once every 12 months, or up to six week after you have been declined for a credit card or loan. This system is in place so that credit reporting agencies are not overwhelmed with requests.

Although there are many free credit reporting services advertised on television and online, many of these require a subscription service or some kind of monetary compensation. Many online "credit reporting" agencies are also scams designed to get a user's Social Security number as well as other personal information.

Despite having very entertaining commercials, FreeCreditReport.com actually does not provide a free credit report. Instead, they charge money for a monthly subscription service that gives you access to your credit report. The company behind this site was recently sued for misleading advertising, and if you purchased this subscription service from 2000-2003, you may be eligible for a refund. See the FTC website, listed in Additional Resources, below, for more information.