Most people today understand that they have a credit score and that it’s important they know it. But there can be differences between what are called “consumer credit scores” and FICO scores, which are what banks, credit unions and auto loan providers use when they decide whether or not to give you a loan
What you will learn in this article
- Where your credit scores come from
- Why there are different versions of your credit score
- Whether consumer credit scores are worth the money
- How you could get your score free – sort of
- Why some of the “free” credit score websites require payment information
- How to get your score totally free
- What’s a good credit score
Where these scores come from
To understand this whole credit score thing, you need to know where they come from. FICO (formerly known as the Fair Isaac Corporation) has been using its algorithms for decades to predict default risks. To put this another way, the reason why your credit score is important to a lender is because it’s a predictor of risk – or how likely you are to pay back the loan. In addition to FICO there is now another credit score called the VantageScore, which was developed by the three credit reporting bureaus. While both the FICO and VantageScore systems are updated periodically some lenders don’t necessarily buy the most recent version. They may actually stay with an older version if they’re happy with how it works. The VantageScore as well as scores you would get from sites like freecreditreport.com are the “consumer” scores.
As you can see from this, there are a number of different ways to measure your credit score. It could be FICO’s most recent version, a FICO version from several years ago, last year’s VantageScore or its most recent iteration.
Still worth the money
Despite all of this, your credit scores are still reliable snapshots of your financial life. Of course, they’re not perfect. But they are better than nothing. If you pay around $15 for your credit score, this still represents a relatively cheap way to assess your credit worthiness.
Getting your credit score free – sort of
You can get your true FICO score for $19.95 at the website www.myfico.com or get it free if you’re willing to sign up for a trial subscription to the company’s Score Watch program. There are other websites where you can purchase your credit score for around $15 as noted above. There are also sites where you can get your scores free – sort of. For example, the website www.freecreditreport.com offers two options: You can get a free “Two Day” credit score or an instant credit report and score for $1. In both cases you will have to create an account before you see your score, which means typing in your name, address and email address. You will also have to add your Social Security number, date of birth and in the case of the $1 report, your payment information. Then there’s the fine print, “When you order your $1 Credit Report and free Score here, you will begin your trial membership in freecreditreport.com. You will be billed immediately $1 for your Report and Score. If you don’t cancel your membership within the 7-day trial period, you will be billed $19.99 for each month that you continue your membership”
What these companies rely on
What these two companies and others like them rely on is that you’ll forget to cancel your membership so they can continue to bill you $12.95, $19.99 or whatever a month until you notice the charge on your credit card and cancel your membership.
There are several sites where you can actually get your credit report free without the fine print. One that we like is www.CreditKarma.com. It will not only provide your credit score free but if you type in your credit card and loan numbers it will show you their balances and the total amount of your debt and the history of your credit score. However, do keep in mind that this will be your Experian score and not your FICO score.
All three at once
There is also a site where you can get all three of your credit reports simultaneously. It’s www.annualcreditreport.com. You will not be able to get your credit score there but you will be able to get all three of your credit reports free – at least once a year. If you need to see your credit reports more often than annually, you’ll have to pay for them. Many people choose to get their reports at the rate of once every four months, which is a sort of way to continually monitor your credit.
Here’s a video with good information about getting your credit report and credit score free.
What’s a good credit score?
When you do get your credit score, you may wonder whether you have a good one. If you’re not familiar with credit scores they range from 300 to 850 with the higher the better. They are generally grouped into ranges as follows.
• Between 700 and 850 – Very good or excellent credit score
• Between 680 and 699 – Good credit score
• Between 620 and 679 – Average or OK score
• Between 580 and 619 – Low credit score
• Between 500 and 579 – Poor credit score
• Between 300 and 499 – Bad credit score