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Warning: Free T-Shirts Will Cost You

If you're heading out to RFK Stadium for the home opener today--or going to any stadium, county fair or other big public event anytime this summer--you're likely to run into those alluring giveaways in which credit card companies offer a free t-shirt, blanket, hat or tote bag if you'll just sign up for a free new card.

It seems like an easy, sweet deal. You hand over your info--extra bonus: sometimes they don't even check to see if your data is real--and you get something free. What could be bad?

Aside from the small risk of identity theft anytime you hand your social security number to a complete stranger, there's a much stronger reason why you'd be better off shelling out the $20 or whatever outrageous price they're charging over at the souvenir stand.

I found this out the hard way. The other day, my annual renewal arrived from Amica Mutual, the company from which we buy homeowners insurance. The renewal notice said it was no longer possible to offer us the lowest premiums because our credit score had dropped. The reason for the drop: "Unfavorable" number of recently opened accounts. The t-shirts.

I had indeed helped myself to several--probably four or five--"free" t-shirts and hats over the past two years. I never used, never even activated the cards that came in the mail. It turns out that having a bunch of credit inquiries on your credit record will lower your score.

Similarly, though I've never done this, it turns out that accepting those annoying offers to transfer your credit card debt will also sabotage your credit score.

Here's some info on how to improve your credit score.

As for me, I'm paying for those shirts, big time. Consider yourself warned.

By Marc Fisher |  April 11, 2006; 7:24 AM ET
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Comments

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I swung by RFk yesterday to pick up my tickets. I didn't want to repeat the exhibition game's experience of waiting forever. While there I saw they had brand new signs, with the Nationals' name & logo, specifiying what can't be carried into the park. There was lots of ho-hum stuff: fireworks, tripods, illegal substances, tripods again (they must hate Martians), etc.

But there were two things on the list that might be trouble. First, they are banning backacks and large bags. Ouch. Second, they say they are bannign all food and beverages. Grrrrr. I thought we went through this battle last year? I asked one of the staffers if the list was for real and he said it was. Hmmm.

Posted by: red sox fan | April 11, 2006 7:40 AM

"The reason for the drop: "Unfavorable" number of recently opened accounts."

Yup, you learn this in Credit 101. I assume you also don't regularly request and read your credit reports from the 3 major companies? If not, you should do those. And cancel/close accounts you don't use anymore. Having large available (even if unused) credit lines out there (i.e. multiple cards) will reduce the amount a bank is willing to lend for a mortgage or home equity line. They feel that if you have access to a lot of credit, you could run up your debt - putting their debt at risk. If you do get the loan you want, the rate will be higher.

Posted by: Rob | April 11, 2006 8:36 AM

Another thing that makes inquiries against your credit, or did when I graduated college--applying for jobs with government/security clearance requirements. They all run credit checks. I got out of college with one (paid every month) credit card, and Verizon wanted a *huge* deposit to give me a cell phone, because there were too many inquiries on my statement. Granted this was 1999, but not sure what changes have been made to the system?

Posted by: Annapolis, MD | April 11, 2006 9:41 AM

It is a good idea to get the free credit reports that you are entitled to by law, but be sure to go to the official free site
www.annualcreditreport.com
rather than one of the many sites like freecreditreport.com which promise the free report and then gives you a sales pitch for a monthly fee credit monitoring system. The free site will not provide a credit score for free, but you do get reports from the three major suppliers; Transunion, Experian, and Equifax. You will probably find credit cards still active on there that you thought you had cancelled. I did.

Posted by: Del Ray | April 11, 2006 9:51 AM

Careful with Rob's advice about closing unused credit cards. This won't help your credit score and may actually hurt it significantly by reducing your length of credit history and by increasing your percentage of available credit used. So closing those cards will make the situation with your car insurance company worse because the car insurance company doesn't care about whether your "total available credit" is high or low.

Mortgage lenders do care about whether you have a large amount of "total available credit" and this can negatively impact your ability to get a loan. However, most lenders will simply ask you to close an account or two if they have a problem.

Posted by: Greg | April 11, 2006 10:19 AM

None of the posters see anything wrong with the policies of the credit score issuers in this? This is where consumer law falls very short. And remember, it is our tax dollars that support mortgage lenders, large corporations (through favorable tax policies, banks (federal reserve). The mere act of filling out a form should have no effect on credit. Suppose I go car shopping to multiple dealers who all run credit checks. Because I am looking for the best deal possible I should be penalized?
Unfortunately, I have no solutions, since changes to the way business is done is in the hands of political entities that really have no desire to help the less than powerful and rich.

Posted by: Cate | April 11, 2006 10:38 AM

Umm...it seems that you also haven't visited Michelle Singletary's chat or column in a while. She talks a lot about how you can wreck your credit score with seemingly innocuous behavior. That could be a good cross-over, though. You and others like you (educated, well-employed, etc.) and the things that you just don't know about credit.

Posted by: Harry | April 11, 2006 10:44 AM

There are two bottom lines to be considered in your story about your insurance company and the dropped rates....

1. The entire credit rating system is an artificial device used by companies for one purpose..to maximize profit. Every department store, K-Mart, Target, etc in the world will offer you a savings on your purchase if you will only open a credit card account with them. The fact that many people bite has little impact on their ability to pay - they just want the 10% savings. It does, however, give the big boys a convenient reason to raise your rates. After all, the name of the game is to move as much money from your pocket to theirs as possible.

2. Companies such as your insurer no longer consider you a valued customer .. you are just an account to get as much money as possible out of. I would look for a new insurance company.

Posted by: Alexander Currie | April 11, 2006 10:47 AM

It's funny how quickly college students learn this when they see the "free t-shirt with credit card application" folks on campus. Just use fake names, addresses and fake Social Security numbers when filling out the applications, and all of a sudden you have a complete spring slacker wardrobe with nobody bugging you to activate their credit card. Why would anyone give out their personal information to a complete stranger on the street (or in a stadium), anyway?

Posted by: Anonymous | April 11, 2006 11:07 AM

Having just graduated a state University, I took advantage of the free t-shirts (sometimes even free Subway sandwiches). But even as a naive college student, I new better than to give my real information. They don't check your credit there on the spot. By time they realize you 'made up' your information, you are long gone with your t-shirt. I do the same thing when making returns in stores. They don't need to know my telephone number and they have no way of knowing if I'm making my phone number up.

My eldest brother goes one step further. He provides the corporate office number for a telemarketing firm as his phone number. Then the telemarketers end up calling themselves. I think it's great!

Posted by: Jimmy's Kid | April 11, 2006 1:12 PM

What's wrong wrong with companies maximizing profits? Actually, I think it's very good.
As far as "another reason" to raise the credit card rates is concerned, I don't understand why any of the credit card companies need any reason at all. The rates in most cases are variable and issuers can change them any time they want it. The only thing that constraints them is the market.
Also, closing "unused" credit cards would only hurt one's credit score, so this is a bad advise. It's better to keep the accounts open, just do not use them.
It would be interesting to know by how much the premium went up. It may well be that the increase in rates is insignificant.
Incidentally, I also received a similar notice from Amica this year. The reason was even more weird: something like "insufficient history on the most recently opened credit account." It's weird, because I have dozens of credit accounts, some with 10+ years of excellent history. Basically, it means that opening ANY account would drop my standing with the insurer. I don't think though that in my case the premium increased by any meaningful amount.

Posted by: max | April 11, 2006 2:03 PM

"2. Companies such as your insurer no longer consider you a valued customer .. you are just an account to get as much money as possible out of. I would look for a new insurance company."


I'm not sure about homeowner's insurance, but changing auto insurance companies can be costly. A couple of years back, I bought a relatively new used car from CarMax. At the time, CarMax had a "partnership" with Progressive, i.e., an arrangement in which they recommended Progressive to their car buyers. I thought, "What the heck? Might as well check the rates."

The Progressive rates turned out to be double what I was paying as a long-time customer of GEICO. I was astonished. I couldn't imagine how Progressive could compete, but, I assume, GEICO must also charge dramatically higher rates to new customers.

If this practice is common in the homeowner's insurance market, switching to a new company might lead to a bigger price increase for Marc than the new Amica rates.

Posted by: THS | April 11, 2006 2:29 PM

I have had several clearance credit checks, and it did not affect my credit score because they were all done within 30 days. I don't remember when the directive took effect, but the point was to prevent people who are looking for cars, stoves, home loans, etc, from taking a hit with several credit checks during a short period of time.

Posted by: contractor | April 11, 2006 2:41 PM

HA HA!

Posted by: Nelson Munch | April 11, 2006 4:00 PM

Regarding clearance-related checks, I think those are "soft" checks, the variety that doesn't affect your credit score. "Hard" checks are the type done by those who would actually issue you credit.

Regarding Geico, the may offer low rates, but I have had more than one friend dropped by Geico the first time they had even a minor accident, whether they caused it or not. Having had both Geico and Progressive, I much prefer Progressive's service, and they were cheaper for me.

Posted by: NoOne | April 11, 2006 4:26 PM

We are doing a term paper on Identity Theft. What you have told us is an already NEW thing we hadn't thought of, yet. When I talked to a legislative aide who is very "experienced" in Washington State, she had no idea that 85% of the ID theft was related to Meth. The tweakers are 24/7. If you haven't visited PBS's FRONTLINE on METH, DO IT! It is outstanding!!! And it puts a lot of things in perspective. It's online. Do it just to see the Before/after shots of tweakers.

Posted by: jguske@tucna.wednet.edu | April 23, 2006 4:23 AM

Great site. Keep doing.

Posted by: Last | August 5, 2006 6:31 AM

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