Nowadays, credit card companies, banks, credit unions, and credit monitoring services routinely provide consumers free scores.
But is it the same credit scores lenders get?
Free credit scores are typically for educational purposes only. When you check your credit scores, you’re not necessarily receiving the same score as the bank or lender offering you a credit card or loan.
Why a free credit score might not be accurate?
1. Free credit scores may not be accurate. Free credit scores offered by your credit card company or a bank are primarily intended to give you a close idea of your scores for informational and monitoring purposes. Those scores may not be the exact same numbers as your bank or lender.
2. There are multiple credit scoring models. The FICO scoring model is most widely used by banks and lenders. But some lenders may utilize other scoring models like VantageScore which was created by the three credit bureaus — Equifax, Experian, and TransUnion — to compete with FICO.
Other credit score models include:
- TransRisk based on data from TransUnion
- Experian National Equivalency Score
- Equifax Credit Score
- Insurance Score
3. FICO is the most popular scoring model. FICO is used by 90% of lenders but it offers multiple FICO Versions. FICO 10 is the most current version, however, lenders are not required to use FICO’s latest versions. According to FICO, the most widely used FICO Score Versions are FICO Score 8, introduced in 2009, and FICO Score 9, introduced in 2014. It often takes new score versions several years to gain widespread usage.
Your score can vary depending on what scoring model is used and which credit report is accessed to generate the score. The major difference in the FICO 9 model is that it puts less weight on medical debt.
The information in your credit reports varies among credit bureaus. Some lenders report to all three credit bureaus, while others may report to one or perhaps none at all. Check your credit reports for errors regularly since an error could affect your score. The 3 major credit bureaus currently let you check your credit report once a week free of charge.
Why knowing your real credit score is important?
Consumers need the same access to the exact credit scores lenders use to make important financial decisions.
Let’s say you want to finance a car and you check your free credit score prior to visiting a car dealership. If you get a free score meant for educational purposes, you could be misled into thinking you’ll get offered the best interest rates.
But that may not be the case if the credit score used by a lender is lower than your educational score. If the score received by the lender is lower you’ll more than likely get offered a less favorable interest rate.
You can always decline the deal you may be offered by a lender but when you’re sitting in the car dealership, having test-driven your new ride, it might be difficult to walk away from the purchase even if the rates are less favorable.
How to get an accurate credit score?
There are lots of credit scores offered to but only FICO scores are used by 90% of top lenders. You’ll get the real accurate credit score from FICO Scores directly obtained at the following:
- myFICO.com – You have the option of choosing a credit score per credit bureau or getting all three scores for a discounted price.
- Experian.com – Annual 3-Bureau FICO® Scores
- FICO® Score Open Access Program – Available at over 200 financial institutions, free of charge. Find those financial institutions here.
Improve your FICO® Score instantly for free with Experian Boost by connecting basic bills you pay monthly like your cell phone, utility bills and streaming services. The average user improved their credit score by 13 points, but some may not see improved scores.