For the last decade, major credit bureaus have been required by federal law to provide consumers with one free copy of their credit report — a tally of credit accounts and payment histories — each year. But consumers generally had to to pay to see their credit scores.
Now it’s getting easier to get credit score information without having to pay for it.
American Express last month began offering card holders access to their FICO scores, joining a growing list of big credit card issuers offering consumers free credit scores.
Since FICO launched an open access program in 2013 that allows lenders to provide consumers with free scores, some 65 million consumers have been given regular access, according to the San Jose, California-based software firm known for its credit scores. That’s up from roughly 8 million when the program started.
“This wider access to credit scores is overall a good thing for consumers, if they take time to look at them, see what factors are affecting the scores and try to improve them,” said Gerri Detweiler, director of consumer education at San Francisco-based Credit.com.
Lenders use credit scores to judge how risky it is to do business with you. Generally, the lower the score, the higher the rate you pay for mortgages, credit cards, car loans, insurance and more.
If your score is really low, you might not qualify for a mortgage or other loan at all. You also could be turned down for a job, apartment rental or denied utility or phone service.
There are many types of credit scores, but the ones generated by FICO are most commonly used by lenders.
Traditional FICO scores range from 300 to 850, with anything in the high 700s and up considered excellent, Ms. Detweiler said.
“The low 700s to high 600s is not bad, but you could get better deals if you improved your score,” she said. For anyone in the mid-600s and below, “You definitely want to do work on your credit.”
Besides Amex, some other major card issuers providing free scores to consumers include Discover, Citigroup and JPMorgan Chase, with Chase limiting the rollout of the service to holders of Slate cards. Typically, card holders can view their scores by logging into their online accounts.
Free scores also are available through several websites — including Credit.com, CreditKarma and CreditSesame — which provide lesser known scores such as a VantageScore.
Watch Out for Other Charges
Be wary of websites that ask for your credit card number in order to get your “free” score.
Credit.com won’t ask for payment information, but people who want their score will have to provide personal information, including a Social Security number, Ms. Detweiler said.
Sites that ask for credit card numbers may be signing you up for a free trial offer that includes credit monitoring, she said. “If you don’t cancel, you will be charged [a monthly fee] for it.” Fees typically range from $10 to $30 a month or more.
There are dozens of versions of credit scores that lenders can pick from to evaluate borrowers. So getting a free score typically won’t give a complete picture of your credit worthiness.
“People will say to me, ‘My score from Credit.com says ‘X,’ but when I went to get a mortgage it was ‘Y,'” Ms. Detweiler said. “Different lenders use different credit scores.”
Still, getting a free score can be useful as a barometer of how your credit history is viewed.
Federal law mandates that consumers who are denied credit — such as when applying for a home mortgage or credit card — automatically see the score that the lender used to make the decision.
Ms. Detweiler said people shouldn’t wait until being turned down for credit to know their score, since taking steps to improve their credit history takes time. Keeping track also may help identify errors on your credit reports.
The single biggest way to raise a credit score is to pay bills on time, since payment history typically makes up about one-third of the score. Other credit-boosting moves include keeping balances low on credit cards, and applying and opening new credit accounts only as needed.
To learn more about credit scores and how to improve them, try www.ConsumerFed.org, www.FTC.gov, or any of the three major credit reporting bureaus: www.Equifax.com, www.Experian.com, or www.Transunion.com.
To order copies of your free credit reports, visit www.AnnualCreditReport.com, or call 877.322.8228.
Patricia Sabatini: [email protected] or 412.263.3006.
