5 Reasons We Need Free Credit Scores Now

Photo (cc) by Stéfan

It’s no exaggeration to say your credit score can change your life. This single number can determine whether you 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.

Credit reports and credit scores

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….

1. You’re being charged for a number based on your information

From your medical history to your driving record, you have the right to review information compiled about you. That’s only fair. If any agency, private or public, is going to store data about you in ways that can affect your life, you should have the right – even the obligation – to review it for accuracy. Certainly, your credit score falls into this category.

Today, private companies like FICO credit score creator Fair Isaac and the big three credit reporting agencies (CRAs) – TransUnion, Equifax, and Experian – charge whatever they choose for something that I’d argue is already yours.

2. Credit scores shouldn’t be proprietary

To come up with a three-digit FICO score, Fair Isaac applies a proprietary formula to the information in your credit report. Like the formula for Coca-Cola, the way they come up with the score is a trade secret. And like the recipe for Coke, it’s one they presumably make a ton of money from.

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.

3. Existing “free” scores can be confusing and misleading

Go to MyFICO.com right now and at the top of the page you’ll see “Get your FICO score. Free.” in monster type. But is it really free? No. To get your “free” score, you’re required to enroll in something called Score Watch, which after a 10-day free trial begins automatically billing you $14.95 a month for a minimum of three months. You’ll see similar up-selling at the big three credit agency sites.

There’s also confusion created by other less-common credit scores. For example, CreditKarma 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.

Why is there all this up-sell and confusion? Simple. Credit scores are super-important, and they cost money.

4. 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 last 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.

5. Free scores and free reports allow us to be smarter with our credit

I recently wrote a post called Should You Pay for Credit Monitoring? In that story, I quoted Lynnette Khalfani-Cox, a personal finance author who supports the idea of paying for a monthly credit monitoring program so you can get unlimited access to credit reports and scores. Here’s what she said…

“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.”

Well spoken, Lynnette. But why should people – especially those least able to afford it – have to pay for their education? Allowing credit reporting agencies and Fair Isaac to charge for access to the tools to make you a better borrower doesn’t promote education, it hinders it. Start offering consumers precise information at no cost, and you’ll start shattering myths about how credit works.

Join In

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.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
9 Hidden Ways to Get More Out of Amazon
9 Hidden Ways to Get More Out of Amazon

You don’t have to be a Prime member to take advantage of these little-known perks of shopping on Amazon.

10 Expenses You Should Not Put on a Credit Card
10 Expenses You Should Not Put on a Credit Card

Sometimes it’s simply safer to keep the plastic tucked away.

26 Things Everyone Should Keep in Their Car
26 Things Everyone Should Keep in Their Car

These tools and conveniences help protect drivers from hassles and calamities on the road.

8 Ways to Slash Your Internet Bill
8 Ways to Slash Your Internet Bill

No matter what price you are paying for internet service, taking these simple steps can lower it.

6 Reasons I Will Never Trust Suze Orman
6 Reasons I Will Never Trust Suze Orman

Beware: The self-proclaimed personal finance expert has a track record that suggests more sizzle than steak.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
7 Kirkland Signature Items to Avoid at Costco
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

8 Tips for Retiring Comfortably on Social Security Alone
8 Tips for Retiring Comfortably on Social Security Alone

It’s never too early to start learning how to live well while living on less.

Am I Eligible for My Mother’s Social Security Benefit?
Am I Eligible for My Mother’s Social Security Benefit?

Can an adult daughter tap into her late mother’s benefit?

11 Generic Products You Should Buy at Costco
11 Generic Products You Should Buy at Costco

Not all generics are worthwhile, but these are among the best from Costco’s Kirkland Signature brand.

9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

This Surprise Factor Can Raise Your Risk of Dementia
This Surprise Factor Can Raise Your Risk of Dementia

Nearly half of U.S. residents may face this threat.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

Organize Your Home With These 10 Thrift Store Finds
Organize Your Home With These 10 Thrift Store Finds

Resolve to be clutter-free in 2021 with these secondhand purchases.

This Gas Station Scam Is Victimizing More Drivers
This Gas Station Scam Is Victimizing More Drivers

For the second straight year, a growing number of Americans believe they’ve fallen prey to this scam.

11 Laws You Could Be Breaking Without Knowing It
11 Laws You Could Be Breaking Without Knowing It

Seriously? Fibbing about the weather is a crime? This and other little-known legal traps await the unwary.

6 Legal Documents Retirees Need — but Don’t Have
6 Legal Documents Retirees Need — but Don’t Have

Few retirees have all of these documents that are crucial to their golden years — especially during a pandemic.

These Are the 3 Best Used Cars You Can Buy
These Are the 3 Best Used Cars You Can Buy

These vehicles boast reliability, safety and long-lasting value.

13 Things Seniors Can Get for Free — or Almost Free
13 Things Seniors Can Get for Free — or Almost Free

There are many ways to get cheap or free services and goods after reaching a certain age.

15 Amazon Purchases That We Are Loving Right Now
15 Amazon Purchases That We Are Loving Right Now

These practical products make everyday life a little easier.

Internet Providers Can’t Charge You for This Anymore
Internet Providers Can’t Charge You for This Anymore

Starting this month, your ISP no longer can bill you for this fee.

Can a Divorced Widow Claim Her First Husband’s Social Security Benefits?
Can a Divorced Widow Claim Her First Husband’s Social Security Benefits?

The rules are complicated when it comes to eligibility for survivors benefits.

9 Small Expenses That Are Bleeding Your Budget Dry
9 Small Expenses That Are Bleeding Your Budget Dry

Keep more of future paychecks by eliminating these budget-busting unnecessary expenses.

15 Painless Ways You Can Cut Costs in 2021
15 Painless Ways You Can Cut Costs in 2021

Follow these tips to save, so you’ll have money for things that really matter.

11 Huge Retirement Costs That Are Often Overlooked
11 Huge Retirement Costs That Are Often Overlooked

Does your retirement budget account for all of these costs?

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.