We’ve all been waiting for it. Free credit reports have been around for awhile now, but what about a free credit score? Isn’t it about time we had free access to a score that’s generated using all our own personal financial information and then sold to lenders who want to assess our riskiness as borrowers?
I’m not talking about free access to some generic credit bureau score that 99 percent of lenders would never actually use. There are plenty of free credit scores like that floating all over the Internet. What I’m talking about is the mighty 800-pound gorilla in the credit-scoring world—the FICO score. Don’t we deserve free access to our FICO scores too?
Fortunately, you’re now closer than ever to having that right. In fact, the next time you compare some no annual fee credit cards online and apply for a card, there’s a good chance you’ll receive free copies of your FICO scores from the lender. The free scores won’t be limited to when you apply for credit cards either. If you apply for practically any sort of financial product after July 21st, you’re probably going to receive copies of your FICO scores too. So what’s changed?
The Federal Trade Commission stated in a press release on July 6th, 2011 that some final changes were made to the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. The new rules will go into effect on July 21st, and they require creditors to “disclose credit score information to consumers when a credit score is used in setting or adjusting terms.” The new wording sounds rather broad, doesn’t it? Well, it is.
In the past, it was thought that free credit scores would only be provided to consumers if their application was denied or they were given less than favorable rates due to their credit score. However, many experts believe that the new changes have broadened the rules so much that a lot of lenders will simply choose to provide scores in all circumstances to remain compliant.
This is really great news for consumers. While it’s true you’ll still have to apply for credit to get a free peek at your scores, it’s a big step in the right direction. A free peek, regardless of whether you’re approved or not, is certainly better than no peek at all.
Joshua Heckathorn runs Creditnet.com, a free resource for anyone who wants to learn more about credit and compare the best no interest credit cards or credit cards for bad credit online. He resides in Seattle and holds an MBA and B.S. in finance.