The truth about free credit scores
Though the credit bureaus must give you free annual reports, their important numbers will cost you. Now 3 sites offer free peeks at those scores, but how helpful are they?
If you’re curious about your credit scores, you might have tried one of the plethora of Web sites and services that offer some free credit information, then lure you into paying for your scores, usually as part of a credit-monitoring package.
Consumers are entitled by law to free credit reports– which are simply records of your borrowing and repayment history — but the numerical scores derived from those reports will cost you, in part because credit-reporting agencies aren’t required by law to provide them for free to consumers along with the reports.
Now a handful of company Web sites give consumers at least free glimpses at their credit scores. The sites — Credit.com, Credit Karma and Quizzle — offer a window into the key factors that go into calculating your scores, what you can do to improve them and how your credit stacks up against other people’s. Last week, for example, Credit.com launched free credit report cards that show consumers how they’re likely to rate across five credit-scoring models.
All three sites, which have ties to the credit industry, aim to make money through advertising or through fees if users sign up for products offered on the site, such as credit-monitoring services, credit cards or mortgages.
As banks clamp down on lending, it’s become more critical than ever to know your credit scores. Financial institutions use them to determine the granting and pricing of everything from credit and insurance to cell phone use and, in some cases, employment.
For years, the best way consumers could get their scores was to buy them from one of the three major credit-reporting bureaus — Equifax, Experian and TransUnion — or from Fair Isaac, the originator of the widely used FICO credit scores. Consumers can also get free credit reports at AnnualCreditReport.com once every 12 months from each of the three bureaus. But the site, which was created by the bureaus, sells scores separately, usually for about $8 each.
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There is variation among credit scores, depending on which scoring model is being used and which credit bureau the data are pulled from.
Lenders may choose from FICO, from the VantageScore — a score developed by the three credit bureaus — or from any one of the credit bureaus’ individual scores. Adding to the confusion, lenders may choose from multiple versions of the same scoring model. FICO, for example, recently rolled out its latest version, FICO 08.
Comparing the sites
To gauge how easy to use and accurate Credit.com, Credit Karma and Quizzle are, we pulled our credit scores — which may or may not be the actual scores lenders see — and compared the data with information in the credit reports and scores we obtained from AnnualCreditReport.com. (All three sites do “soft pulls” on your credit file, which they pay for and which don’t hurt your scores, according to the companies. In other cases, applying for new credit is considered a “hard” query and can hurt your credit scores.)
Getting the scores from the sites was relatively quick and painless. To get started, you have to set up an account and answer several identity-verification questions. Though you don’t have to sign up for any services or provide a credit card number, you do have to provide your Social Security number at Credit.com and Credit Karma.
Quizzle, by contrast, uses information you provide when setting up your account to locate your credit report at Experian. Then it tries to verify your identity using information in your credit report. But if those questions are based on incorrect information, or if you can’t remember the answer, you might be prompted to enter your Social Security number.
All the sites say they encrypt any data that are stored in their files. Credit Karma, for example, strips out any personal account information from users’ data and immediately deletes the Social Security number once it is used to pull a credit report.
article source: moneycentral.msn
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