Free credit scores -- what's the catch?

It makes good financial sense to track your credit, but don't get obsessed with credit score perfection.

By Credit.com May 9, 2014 11:21AM
This post comes from Christine DiGangi at partner site Credit.com.

Credit.com on MSN MoneyConsumers often check their credit scores for the first time when they're about to apply for a loan or have been denied one. If you're proactively checking your credit, it's sometimes difficult to know where to start, because many websites and companies offer credit scores, some for purchase and others for free.


What's the best choice?

Credit cards © Imagemore/Getty ImagesBefore choosing a credit score to look at, there are a few things to know. First, there are hundreds of scoring models out there, and while lenders use some of them, other scores exist for purely educational purposes. An educational score may be helpful if you use it to track the ups and downs of your credit score, but you should know that no lender is looking at that particular score when evaluating your credit application.


You also need to know your scores fluctuate, even when you haven't made a drastic financial change. If you have 10 tradelines on your credit report -- say, a few credit cards, student loans and a car loan -- that probably means 10 different data furnishers are reporting information about your accounts to credit bureaus at different times. Your credit score is a snapshot of your credit report at the moment it's pulled, meaning your score could change a few points if you buy it today, apply for a credit card tomorrow and buy the same score several days later.


Finally, not only will you not know which scoring model your potential lender will use in its application-approval process, you may not know a particular lender's standards — the score one creditor considers great may not be good enough for approval by another lender.


Can you really get a free credit score?

There are many ways to check your credit score for free. For example, when your credit application is denied, you are entitled to a free credit report and a free credit score, as well as an explanation from the lender about why you were rejected.


Outside of credit denial, you can request a free credit score through a few websites, and some credit card companies give you a credit score every month or quarter through the FICO Open Access program. With websites offering free credit scores, you'll want to know if the score is educational or used by lenders -- the two free credit scores offered through Credit.com are lender scores -- but either way, checking the same score regularly will help you identify behaviors that help and hurt your credit.


Don't get carried away

The most important thing to know about credit scores -- whether you purchase them or access them for free -- is you shouldn't become obsessed with the numbers. You'll never know all your scores, and because your credit reports change so often, vying for perfection isn't a worthwhile use of your time.


Focus on making loan payments on time, using very little of your available credit and applying for credit sparingly. Check your credit reports (you can get them free at AnnualCreditReport.com) regularly to spot errors or fraudulent accounts (and address them promptly). If you maintain good, basic habits, you should have a decent credit standing, no matter which model a lender uses to make decisions.


More from Credit.com


VIDEO ON MSN MONEY

1Comment
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.