9 months to polish your credit

By MP Dunleavey

Editor's note: Join columnist MP Dunleavey and a group of women as they seek to strip away the myths around money, liberate themselves from debt and find financial sanity. Follow the continuing quest of the Women in Red every other Wednesday in Dunleavey's column on MSN Money.

Imagine that a fairy waved her magic wand and allowed you to see the impact of your every financial move -- good and bad -- on your credit scores.

Wouldn't you become a smarter, more well-behaved little consumer?

That wasn't the intent behind the multimillion-dollar class-action lawsuit against TransUnion, one of the three major credit bureaus collecting data about how well you pay your bills.

But that's what we were thinking here at Women in Red headquarters in May when we learned that as part of a proposed settlement, TransUnion had agreed to offer millions of people free credit monitoring and scores for several months.

What if we all signed up and used those months of free credit updates as a mirror to spruce ourselves up financially? Something tells me that a few of us could use it.

Read on to learn how and why you should join the 2008 Credit Score Race.

Bad, bad TransUnion

TransUnion is part of the holy trinity of credit bureaus that also includes Equifax and Experian. These are the companies we rely on and even fear because they can alter the course of our financial lives. Each collects personal data, calculates its own credit scores and provides the data Fair Isaac uses to prepare its FICO scores. Lenders use the scores to predict risk -- and so do insurers, employers and landlords.

It seems that TransUnion, the guardian of millions of people's financial histories, might have been profiting from people's personal data.

The lawsuit against TransUnion, filed in Chicago, claims the credit bureau sold millions of consumers' private financial information to third parties for marketing purposes.

TransUnion admits nothing. The fact that TransUnion agreed to a settlement worth at least $75 million is not an indication of any wrongdoing, the company says.

And my grandmother was a hedge fund manager.

A few party favors

In any case, the settlement, which won't be finalized by a court until September, entitles about 150 million Americans to a little giveback from TransUnion, a small token of their regret for having telemarketers interrupt your dinner for the past 10 years.

You can sign up for one of the following options between now and Sept. 24 at this site. It's also possible to apply by mail. For details, call 1-866-416-3470.

Here's what you can do:

• You can opt for six months of free credit monitoring services, which would give you unlimited access to your TransUnion credit report and credit score, as well as e-mail notification of any changes to your report. If you take this option, you may be entitled to a small cash payment (if there is a cash distribution when the final settlement is approved), and you can file an individual lawsuit against TransUnion.

• You can sign up for nine months of the same free services, but then you waive the right to claim any cash and cannot file any further lawsuits against the credit bureau.

• The third option is to file for a cash payment only, in which case you waive the right to any of the free services. And there is no guarantee you'll get any cash, as it depends on how much money is left after everything else is paid.

Who is eligible to sign up for benefits? Anyone who had an open credit account (a card, a mortgage, a loan) between Jan. 1, 1987, and May 28, 2008.

And isn't that pretty much everybody?

Reasons to be wary

Consumer advocates are pretty tired of the shell games that the bureaus play.

Americans are already entitled to one free report each year from each bureau. The designated Web site is AnnualCreditReport.com; others hawk credit monitoring you really don't need unless you've been a victim of identity theft or are trying to buff up your credit for a mortgage or other big loan.

"My concern is that consumers who sign up for the free credit monitoring as part of this settlement could find themselves being switched to a paid service," says Ed Mierzwinski, a consumer advocate with the U.S. Public Interest Research Group.

Continued: TransUnion

 1 | 2 | next >