Today I was reminded again about that little three digit number so many people like to talk about—their credit score. Everybody seems to be concerned about their number, right.
What is Your Credit Score?
There is so much publicity about your credit score (how to find out what it is, how to protect it, how to improve it, etc.) that it is doubtful very many people do not know what it is, but just in case here is the plain English definition.
Your credit score is a three digit number compiled by the credit agencies that rank your credit worthiness in their eyes based on your credit history which is used by financial institutions and others to help them decide whether to give you a loan, how much to charge for your auto insurance, and whether to give you a job (among other things).
Often you hear your credit score referred to as your FICO score. Technically this refers to the score provided by the Fair Isaac Corporation (now officially renamed FICO) which is the most widely used by financial institutions. A number of other organizations provide credit scores as well, but they are not so well known.
Can You Get Your Credit Score for Free?
Your credit report is more important in many ways than your credit score and you can get it for free. Once a year each of the three major credit reporting agencies are required by law to give you a free copy. You can ask for yours at AnnualCreditReport.com which is operated jointly by the three major reporting companies (Experian, TransUnion, and Equifax).
But what about your credit score? Is there any way to get it for free? Not really. There are lots of people promising to give it to you for free. But to get it for “free” you have to sign up for some kind of service at a monthly rate or something similar.
At least one organization (Credit Karma) does give you a score but it is not your FICO score, only one based on less prominent score keepers. Of course, that may be helpful as a guide, but it is not the one that will likely be used most often to determine your financial options.
Can We Make Our FICO Score Free?
My stimulus for writing this post came from an email I received this morning from Jim Guest, President of Consumer Reports about this very issue. I think it raised a valid point.
What he suggests is that the credit reporting agencies release their comparable credit score numbers with your credit report each year. Clearly this would be an easy thing for them to do and I do not really know why they would not consider that part of their report anyway.
Personally, I think it would be even better to require FICO to make their number available, and probably more often than once a year.
Businesses wanting to use our FICO score would still pay when they wanted it, but this is information they collect about us and if they are going to collect private information about us (without our permission at that!) we should at least have a right to know what they are reporting to others before we encounter it across a loan desk!
Generally I do not like more government regulations since they have clearly gotten out of hand in recent years. However, in this case we may need one more. It was Guest's suggestion that we all contact our representatives to promote this idea. Not a bad idea I think.
What Do You Think?
Personally, I do not care much about my FICO score or my credit report either. I have no intention of borrowing money for anything anymore. But then again, who knows what life holds around the corner.
What do you think? Should we be able to access our FICO score without having to pay for it?
