Why we need free credit scores now
For nearly 10 years, we've all been able to get free credit reports. But, with few exceptions, we still can't see our credit scores without paying for the privilege.
This post is from Stacy Johnson at partner site Money Talks News.
It's no exaggeration to say your credit score can change your life. It can determine whether you get a job or own a home. It affects how much you pay for insurance. It influences how much you pay when you borrow, which determines how long it will take to become debt-free.
Much like your final grade summarized your command of a course in school, your credit score is the distillation of everything in your credit history. Thanks to a law change in 2003, you can now see your credit history free once a year by going to AnnualCreditReport.com. Yet, if you want to see the most commonly used "final grade" -- your FICO credit score -- you're expected to pay $19.95.
That's not fair. It shouldn't be allowed to continue, and you can help change it. To see what you can do, check out the video below, then read on for more.
The reason we have free credit reports through AnnualCreditReport.com is because consumers and their advocates fought for it. To quote nonprofit Consumers Union: "Consumers won the right to a free copy of their credit reports nearly a decade ago by bombarding Congress with hundreds of thousands of messages."
Let's try the same tactic again. As you saw in the video above, Consumers Union is sponsoring a free credit score petition, which they'll forward to Congress. Here's why I want you to join me in signing it:
Today, private companies like FICO credit score creator Fair Isaac and the big three credit-reporting agencies -- TransUnion, Equifax and Experian -- charge whatever they choose for access to something I'd argue is already yours.
But this isn't soda that you can choose not to consume. It's your financial life, and you don't have a choice whether or not to participate. If everyone in America was required to drink Coke, wouldn't we demand to see what's in it?
Fair Isaac provides hints into its score formulation on Web pages like this, and calls it "education." What would be educational is to know exactly how these scores are formulated and precisely what influences them. There's only one reason to keep a formula secret: so it can be sold for more money.
There's also confusion created by other, less-common credit scores. For example, Credit Karma offers a no-strings-attached free score. But it's not the FICO score most commonly used by lenders. Instead, you get TransUnion's proprietary score, called VantageScore, a model developed jointly by the three big credit-reporting agencies.
Granted, this score is better than none, and it can at least give you an indication of your overall creditworthiness. But since it isn't the score most lenders will use, it's not good enough.
Other half-measures in the law miss the point. There's another way to get a free credit score: Get denied for credit or get offered a crummy interest rate. Since July, lenders who deny your loan application or offer you less than the best rate have to explain why, including your score, if that was a factor.
But getting a free score after you've been denied credit is shutting the barn door after the horse has escaped. Your credit score is most important before you apply, not after you've been rejected.
The single biggest reason to use credit monitoring is that you'll receive an incredible amount of credit education simply by staying on top of your credit. The mere act of constantly reviewing your credit files and being aware of changes to your credit profile promotes enhanced financial literacy and better credit awareness.
If you agree with my logic, show your support by signing the petition. Then share this story with your friends. Let's see if together we can right a wrong.
More from Money Talks News and MSN Money:
MORE ON MSN MONEY
VIDEO ON MSN MONEY
Your credit score is yours to know, just like your bank balance.
Why is it a secret and contolled by Credit Bureaus?
Should be available to all any time u want to find out.
>>>> Can the US Law Makers do this favor to all the people who vote them into their Privileged Offices and they enjoy Golden Perks?
It is high time.
Credit reporting is a racket. This is their credit report not yours, they own it and control it. Obtaining this information should be illegal. If you want a copy you have to pay for it and sign a statement that you will not sue them for inaccuracies in this report.
(read the fine print)
I had a mortgage loan 10 years ago and the loan was sold to HouseHold bank and the crooks pulled my credit every month.
I was paying the crooks 13% rate and they were trying to steal my house, i finally got rid of them but got another bunch of crooks,
Merrill Lynch and Wilshire Credit.
Credit reporting and rating for purchase of Food, clothing and shelter should be outlawed,
THe can review their files for other types of credit one time not every month.
The government as allowed is citizens to be singled out and place in a restricted class and deprived the certain rights.
Pay cash for your things etc and your credit score wont matter. And don't say job either. if your credit score is keeping you from a job then most likely you don't have any marketable skills.
And to not sleepy about them giving it away free. Who the **** gave them the right to sell your personal information in the first place?? Probably some **** with a pea sized intellect, kinda like that displayed by your comment. Why should I have to pay to check something they never had the right to get in the first place.
That's not fair....companies should have to give away their stuff for free.
You know what's not fair I need to eat. Grocery stores should give me food.
You know what else ins not fair, I can't dunk a basketball, LOWER the rims.
You know what isn't for---you think life should be equal for and those that build a better mouse trap should be penalized.
Of course that would put Fair Isaac out of business.
Want a home loan? It would go back to pre-FICO days and take months to get loan approval, in most cases. Plus your interest rate would be higher, as the banks would be giving a lot of loans with limited information on how you pay your bills. Want a credit card? Plan on 20% + interest, and after a year or two you may be able to get it reduced. Pre-FICO people were complaining about having to pay high interest to cover those who did not pay their bills.
I do not want to go back to those days.
Copyright © 2013 Microsoft. All rights reserved.
Quotes are real-time for NASDAQ, NYSE and AMEX. See delay times for other exchanges.
Fundamental company data and historical chart data provided by Thomson Reuters (click for restrictions). Real-time quotes provided by BATS Exchange. Real-time index quotes and delayed quotes supplied by Interactive Data Real-Time Services. 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 SIX Financial Information.