Free credit scores for everyone! That’s (kinda, sorta) great! But it’s also confusing

President Obama makes the free credit score announcement at the FTC. Click to watch.
President Obama makes the free credit score announcement at the FTC. Click to watch.

Great news! Soon, the majority of Americans will have free access to their credit score. This is a major victory for consumers, a decade or more in the making. It means that they will be able to take action to improve it in readiness for something important like applying for a mortgage. This 2019 review of fingerhut by Credit Knocks gives you some ideas of how you can go about doing this.

Check that. Soon, the majority of Americans will have free access to a credit score. This is a very good thing. You should take advantage of the offer as soon as it’s available to you, as once you know what your credit score is, you will be able to take action to improve it if you need to. When it comes to improving credit scores, it is never too late to get it to a higher number. From being able to apply for a loan and buy a new car, to applying for a credit card, having a good credit score would make a big difference. Many people find themselves in financial hardships, but it isn’t something that can’t be resolved, especially when you can do some research into 5 things to check when you need cash now (relating to taking out a loan). The more you know about credit scores, the better this may be for you in this situation.

For example, you can find out how to fix your credit on your own in order to make sure you will never be in a position where you are considered unreliable when you need the financial help of any kind. But it’s hardly time to declare victory.

The White House announced this week that several big banks are hopping on the free credit score bandwagon. Joining Discover, which began offering free FICO scores to cardholders last year, will be JPMorgan Chase, Bank of America and Ally Financial. USAA announced it will offer the FICO competitor VantageScore for free to members. Last fall, Citigroup announced it would join the free credit score group early in 2015. That’s all well and good, but as Michael Schrieber wrote recently over at partner Credit.com, it’s really important to remember that A credit score is not THE credit score. Some people have as many as 50 credit scores.

“The reality is that for the foreseeable future, for many Americans, confusion is effectively built into the system,” he wrote. “The problem is that often when people get their credit scores — particularly when they are getting them from banks — they don’t know which scoring model and bureau data are being used to generate the score. Further, some people don’t realize they have more than one score, and just assume that the score they are seeing is THE score. That can be particularly confusing if you’re getting multiple scores each month from different providers. People often assume that one or more of the scores is wrong.”

Here’s a little more on what’s going on, and what’s available from which banks. Free FICO scores have become more available to consumers since 2013, when Fair Isaac Corporation announced its FICO Score Open Access program, which gave banks the right to share a score with consumers. Additionally, banks claim the scores have increased customer loyalty.

“Consumers who regularly see their FICO scores are more engaged, increasingly loyal and make positive changes in credit management behavior, resulting in improved FICO scores,” Fair Isaac said in November while discussing free score programs offered by Barclaycard and First Bankcard.

Ally Financial: Will offer FICO scores, beginning with a pilot program in February and a full launch this summer to auto finance customers.

Bank of America: “We will begin offering credit scores to our consumer credit card customers later this year. No more details to share at this point,” Bank of American spokeswoman Betty Riess told Credit.com.

Citigroup: The White House announced in October that the bank would begin offering free FICO scores in 2015. That’s an estimated 23 million consumers.

JPMorgan Chase: Plans to offer FICO credit scores at no charge to Slate cardholders “in the coming months,” said spokesman Paul Hartwick. That covers about 10 millions consumers.

USAA: Will offer cardholders access to the Experian VantageScore, a competitor to the FICO score. USAA is already testing the program and expects it will be available to all consumers by March.

So many consumers will have access to a FICO score — good, because FICO controls an estimated 90 percent of the score market — as opposed to a “FAKO” score, generated by folks and formulas other than the original Fair Isaac firm. But it’s important to note: Not all FICO scores are the same. A FICO based on a Trans Union credit report differs from a FICO based on an Experian report. Different scores are generated based on reasons a banks wants to see them — a car loan application credit score might be different from a credit card application credit score. And credit scores can and generally do vary with the time of the month you generate them.

“It’s far from certain that the FICO score you get from one institution will be used by another,” Schrieber said. “Even if you buy a FICO score directly from MyFico.com, it’s far from certain that the score you’ve purchased will be exactly the same as the one a prospective lender is pulling. In that case, for all practical purposes, a ‘real’ FICO score may be no better than an educational ‘FAKO’ score.”

Confused? Then you are paying attention. The good news is this: Free scores will certainly help with consumer awareness. A sudden drop in any score is a good indicator something has gone wrong, and many folks will now get quicker warnings about problems like identity theft or surprise alleged unpaid bills. That’s all good. Pay your bills on time all the time, don’t overuse credit cards, and your score should remain high enough for you to make the financial decisions you need to make.

But most of all, remember we’re not in high school any more. With so many scores floating around, you are bound to see more people obsess over their credit score than ever before. Don’t fall for that. Grades don’t really matter. What matters is what you are doing with your life. Don’t let the financial industry control you with a three-digit number. Yes, it’s obviously important when you plan to buy a home or a car. But try to keep it in perspective — particularly because A credit score is not THE credit score.

And if you just can’t wait for your bank to get around to its free offer, you can get A free credit score from my partners at Credit.com by visiting their site. You won’t need a credit card — it’s really free — but you will have to enter your personal information.

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About Bob Sullivan 1582 Articles
BOB SULLIVAN is a veteran journalist and the author of four books, including the 2008 New York Times Best-Seller, Gotcha Capitalism, and the 2010 New York Times Best Seller, Stop Getting Ripped Off! His latest, The Plateau Effect, was published in 2013, and as a paperback, called Getting Unstuck in 2014. He has won the Society of Professional Journalists prestigious Public Service award, a Peabody award, and The Consumer Federation of America Betty Furness award, and been given Consumer Action’s Consumer Excellence Award.

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