Get an idea of your credit score without paying a fee
By Pamila Yip – Dallas Morning News
Consumers who get their free credit report from www.annualcreditreport.com often come back with one key question:
Why can’t I get my credit score for free, too?
When Congress mandated that the three national credit bureaus give you a free credit report every 12 months, it specifically permitted the sale of credit scores for a fee.
I don’t expect that to change, despite the consumer complaints I hear.
A credit report is not the same as a credit score, although they are closely related.
A credit report is a collection of all the information in your credit file maintained by the three credit bureaus – Experian, TransUnion and Equifax. It contains such data as your credit accounts, credit inquiries, debt collection attempts and public information such as bankruptcies.
That information is used to calculate your credit score, which summarizes your credit risk. The higher your score, the less risky you are in the eyes of a lender.
The most common score – and the one used by all three credit bureaus – is the FICO score, which ranges from 300 to 850.
The three credit bureaus offer various options for buying your credit score, with prices ranging from $8 to $40, depending on your package. But there are sites that offer a free credit score based on the data they have available:
- Credit.com has developed a credit report card that shows you a snapshot of your credit reports and estimated credit scores according to the five scores most commonly sold to consumers.It gives you an overall grade and also individual grades from A to F on the key criteria that make up a credit score, such as payment history, debt usage, age of your credit and your mix of accounts.
- CreditKarma.com gives you a credit score based on data on your TransUnion credit report.It also gives consumers the ability to simulate certain actions, such as applying for a new credit card and paying off debt, and see how those moves would affect their score.
- Quizzle.com uses data based on your Experian credit report to give you a credit score and a letter grade. It also tells you the positive and negative factors of your credit.
- Sears is giving its cardholders access to their credit score for free. Cardholders can also understand the factors that affect their credit score and learn how to improve their score using a simulator tool. The credit score is based on a cardholder’s TransUnion credit report.
It’s important to know that there isn’t one credit score. Each credit bureau calculates its own credit score, and all three may differ.
Also, a credit score isn’t stagnant. It changes, depending on how you manage your credit.
Your credit score will fluctuate as you pay down or pay off debt, take on new debt, make a late payment or improve your payment history.
“Banks and mortgage companies look at all the three major scores from Experian, TransUnion and Equifax,” said Craig Jarrell, president of the Dallas Region of IberiaBank Mortgage Co. “In the mortgage industry, we use the one in the middle.”
No matter what credit score your lender uses, if you pay your bills on time and practice good financial management, your score will reflect that.
“Common sense prevails,” Jarrell said, “and the less you owe, the better your credit is going to be.”