Many Americans have learned about the importance of having a pristine credit score, and in many cases, they’ve learned the hard way.
If you’ve dealt with a bad score in the past and want to fix it, you know it’s not easy, as it takes time to build your score. And truth be told, no one knows the exact formula used to calculate FICO scores. (FICO, which stands for Fair Isaac Corp., takes your credit information and uses it to create scores that lenders use to predict your financial behavior.) Luckily, the government is taking notice of Americans and their credit scores and is working on changing things.
In a speech at the Federal Trade Commission last month, President Barack Obama announced that Bank of America and Chase bank will start offering free FICO scores to some of their customers. These banks aren’t the first to offer free FICO scores — Barclaycard and Discover were among the first major credit card issuers that started providing scores to their customers at no charge.
These free FICO offerings started appearing after the Consumer Financial Protection Bureau urged major credit card issuers to provide free scores to consumers in an effort to help them improve their credit.
The Significance of a Free FICO Score
Nowadays, your credit history is used to determine everything from what kind of mortgage rate you can get to what type of credit card you can open.
A FICO score is a powerful number that has become a major factor in the decisions made by many lenders in the U.S. By providing this information at no charge, loan applicants may have an easier time checking their scores before applying for a loan, and they’ll know what to expect.
Since these FICO scores are free, you save roughly $20 (the cost of a typical FICO credit score), and they can help you stay on top of your finances and potentially lead to better money management. Additionally, with all the concerns about consumers’ financial security, a free credit score can help alert you to identity theft. For example, a huge drop in your credit score may indicate identity fraud.
Different versions of your score are also available on various sites like Mint.com — just know that the score will vary from the ones lenders use to make their decisions for mortgages and auto loans.
In addition to your free credit score, you can check your credit report. You’re entitled to a free credit report from each of the three major credit bureaus each year. You can go to AnnualCreditReport.com, and grab one from Equifax, Experian and TransUnion. Having both your credit score and credit report gives you a better overall picture of your financial health.
How Free Scores Benefit You and the Bank
Banks want you to exercise responsible credit behavior. Having free and easy access to your credit score throughout the year means you’re more likely to look at it and try to maintain or improve it. Consequently, you might be more likely to practice better spending habits and, most importantly, pay your balance on time every month.
This win-win proposition of free FICO scores is just another reason why other credit card providers are likely to follow suit until it becomes a standard perk with every credit card .
Here are some of the major credit card *providers that offer free FICO scores:
Ally Bank
— Will be offered to auto loan customers starting February 2015, with all customers getting access by the summer.
American Express
— As part of a pilot program running through early 2015, certain American Express credit card and charge card customers are receiving free FICO scores.
Bank of America
— All consumer credit card customers will receive free FICO scores later this year.
Barclaycard US
— Barclaycard Arrival Plus
— Barclaycard Arrival
— Barclaycard Rewards MasterCard
— Barclaycard Ring MasterCard
— US Airways
— Frontier Airlines
— Lufthansa
— Carnival
— Wyndham Rewards Visa
Chase Bank
— Chase Slate
Citibank
— Available to all Citi credit card members.
Discover
— Discover it
— Discover it for Students
— Discover it chrome
— Discover it chrome for Students
— Motiva
— Miles by Discover
— Escape by Discover
First Bankcard
— All credit cards issued by First National Bank of Omaha.
*Note: There are other banks that offer free credit scores as credit card perks. We’ve excluded those offering non-FICO scores such as Capital One and U.S. Bank.
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Credit Cards Have Become Your Ticket to Free Credit Scores originally appeared on usnews.com
