One of the frustrations that many consumers have with the whole credit scoring process is the fact that it is difficult to get a copy of a credit score for free. It is true that web sites like Credit Karma, Credit Sesame, and Quizzle offer access to free credit scores, these scores are not the versions that lenders actually use. Even the “free” score that you get when you sign up for a credit monitoring service doesn’t always reflect what lenders use to determine your credit worthiness. Instead, lenders use specialized credit scores that, while often based on the FICO scoring model, have their own tweaks. As a result, many borrowers are frustrated when they are denied credit due to credit scores they may never see. Lenders can refer them to a free copy of a credit report, but this does not include the credit score.
All of this changed, though, on July 21, 2011.
How You Could Be Entitled to a Free Credit Score
One of the provisions in the Dodd-Frank Wall Street Reform Act singed into law in July 2010, is known as the Free Access to Credit Scores. This part of the legislation requires lenders (and others) to provide you with a free credit score disclosure when an “adverse action” results from your credit. An “adverse action” includes:
- Denial of credit
- Denial of insurance
- Required to pay a higher deposit
- Required to pay a higher interest rate
- Required to get a co-signer
If any of these adverse actions come into effect because of your credit score, the party is required to disclose the credit score in question, and disclose the factors that led to the adverse action. Explanations of reasons for adverse action have been required for quite some time, but credit scores have not been included up to this point. Starting on July 21, 2011, though, if you are turned down for a loan, you will get to see the actual score the lender used. This is a wide departure from past protocol, in which lenders basically referred you to a free copy of your credit report.
Checking Your Credit Score
While this is a step toward more access to free credit scores, you are still likely to have to pay for your credit score. This is because the rules that entitle you to one free credit report from each of the three major bureaus each year (via annualcreditreport.com) do not apply to credit scores. You still have to pay to see your credit score, and your score may differ from bureau to bureau — and from lender to lender.
Getting a free credit score with no credit card from a truly free site like Credit Sesame, Quizzle or Credit Karma can help you keep tabs on whether your score is rising or falling, but if you plan to apply for a big loan, such as a mortgage loan or a care loan, you are better off paying for a FICO score, and possibly for a score from each of the bureaus in order to give you a better idea of what lenders will judge you by.