If you are curious about your credit scores, you may 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 a free credit report—which is simply a record of your borrowing and repayment history—but the numerical scores derived from these reports will cost you, in part because credit-reporting agencies use proprietary formulas to come up with them.
Now, a handful of companies are launching services that give consumers at least a glimpse at their credit scores free of charge. The sites—Credit.com Inc., Credit Karma Inc.’s CreditKarma.com and Quizzle.com—also offer a window into the key factors that go into calculating your score, what you can do to improve them and how your credit stacks up against others. Last week, for example, Credit.com launched a free Credit Report Card that shows consumers how they’re likely to rate across five credit-scoring models.
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John Ueland
All three sites, which have ties to the credit industry, aim to make money through advertising or fees if users sign up for products their partners offer 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 score. Financial institutions use them to determine the granting and pricing of everything from credit and insurance, to cellphone usage 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 Inc., Experian Group Ltd. and TransUnion LLC—or from Fair Isaac Corp., the maker of the widely used FICO credit score. Consumers can also get a free credit report 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.
The reports can span pages of detailed account history, and can be hard for most people to decipher. And even if you pay for a numerical score—which financial-services companies use as a quick way to assess your creditworthiness—the information can be confusing.
There is variation among credit scores, depending on which scoring model is being used and which credit bureau the data are pulled from. Lenders can choose from FICO, the VantageScore—a score developed by the three credit bureaus—or from any one of the credit bureaus’ own scores. Adding to the confusion, lenders can choose from multiple versions of the same scoring model. FICO, for example, recently rolled out its latest version, FICO 08.
To gauge how easy-to-use and accurate the three new sites 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 a “soft pull” on your credit file, which they pay for, and which doesn’t hurt your score, according to the companies. In other cases, applying for new credit is considered a “hard” query, and can hurt your credit score.)
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. While 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 CreditKarma.com.
Quizzle.com, by contrast, …
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