Consumers who want to get their hands on a free credit score might want to look at their credit card statements or online accounts.
A few credit card issuers are providing free access to credit scores for their cardholders. The change could be welcome news for consumers. In the past, some consumers signed up for “free credit scores” and later discovered they had signed up to pay a fee for credit monitoring services.
In early February, Discover rolled out free, three-digit FICO scores on monthly statements for its card members after a test run last year. Barclays is offering free FICO scores to its cardholders, too, via their online accounts but not on their credit card statements. First Bankcard is offering free scores, too.
While the Consumer Financial Protection Bureau is turning up the heat on card issuers to provide more credit score information, many expect that some issuers are offering the free service as a way of being more competitive, too.
John Ulzheimer, a credit expert at CreditSesame.com, said he would expect that more card issuers will be offering access to free credit scores, not necessarily because of the Consumer Financial Protection Bureau’s efforts. But he said free scores could be a way to hold onto good customers, build new accounts or move cardholders away from paper statements to online accounts.
“Credit reports and scores can determine the terms of people’s mortgages, whether they qualify for auto loans, or if they are eligible for different credit cards,” Richard Cordray, director of the Consumer Financial Protection Bureau, said in a statement.
If scores are readily available, he said, consumers could be better able to spot mistakes or problems with their credit report.
Federal regulators noted that fewer than 1 in 5 Americans check their credit report in any given year. Without a regular review of their credit report, consumers may not notice errors in the data or possibly identity theft.
For some consumers, the free scores can be a quick look at where they stand when it comes to borrowing. It’s far better to understand one’s score before trying to take on a new car loan or mortgage. Lower credit scores can lead to higher interest rates on loans and higher costs for borrowers.
But consumers could be somewhat confused because there are a variety of credit scores, so not all issuers will be showing the exact same credit score for a given consumer.
Gerri Detweiler, director of consumer education at Credit.com, said consumers need to realize that they have many scores, not just one.
“So don’t get too hung up on a specific number,” she warned. Instead, pay attention to where your score is rated on a given scale.
Consumers might not see a score that would be used by another lender but the free score is a way to have a reference point to track any significant changes.
“Dramatic shifts will signal something that should be checked out,” said Bill Hardekopf, CEO of LowCards.com in Birmingham, Ala.
Some issuers, including Chase, have declined to comment on any potential moves on free credit scores. Bank of America said it has not announced plans, but supports “providing consumers with the tools they need to better understand their financial situation.”
But others have already announced some new tools.
Barclaycard said FICO scores are available online to its customers for convenient access and as a way to offer information to explain what the score means.
James Saltysiak, a vice president at Barclaycard, said the card issuer has not ruled out putting the scores on paper statements in the future.
Capital One is launching a free interactive tool later this month called Credit Tracker. Capital One cardholders would be able to check their credit score online and monitor their credit report, as well as watch for alerts of fraud. So far, that tool will not be available to customers with store-issued or -partnered cards with Capital One.
Capital One said Credit Tracker will enable cardholders to easily see their credit score “plus track it, protect it, and learn how to strengthen it.”
Discover provides the free credit scores to its card members who have Discover More, Discover Open Road, Discover Motiva, Miles by Discover and Escape by Discover cards. The free scores, which appear on Discover’s paper statements and online, are based on data from TransUnion. Under that scoring system, a score of 580 or less indicates a very risky borrower; while a score of 800 or higher is an exceptional borrower with excellent credit.
Discover said online that its free scores can help customers “stay on top of your credit and avoid surprises.”
Discover notes that some card members might not see a score on their statements, if their credit history is too new. Also, Discover Business card members are not receiving scores on monthly statements.
Discover cardholders also receive some information online at the Discover Account Center to explain what influenced the consumer’s score. More information is at www.discover.com/FICO.
Nothing, of course, is perfect when it comes to free credit scores. A score can only be reliable if the information on your credit report is accurate, so it’s good to try to double-check for errors regularly. Just knowing the score isn’t enough.