Debt Consolidation and Credit Card Counseling

Free credit report? Yes. Free score? No.

Most people know by now that the key to obtaining a loan or a credit card is to have a healthy financial history. Lenders and creditors look at your past experience to try to decide if you are likely to pay your bills on time in the future. It’s an inexact science, but it’s the best they can do. As they say on the mutual fund commercials, “Past performance is no guarantee of future results.” No, it isn’t, but it’s a pretty good guess, and lenders are willing to settle for that.

If you apply for a loan or account, the lender will obtain a copy of your credit report from one of the three major bureaus that keep track of financial information. That report contains a listing of all of your past financial transactions - loans, mortgages, bankruptcies, tax liens, whatever. It’s all there and it outlines whether you paid on time or in full. Along with that report comes your credit score, a three digit number that ranges from 300 to 850 and displays, at a glance, how worthy you are. Higher is better.

Thanks to an act of Congress, citizens can now obtain a copy of their credit report for free from an official Website set up for that purpose. But many people who go there to order copies of their report are surprised to discover that the free report does not include a copy of their credit score. Why not?

The credit bureaus were not too excited about being commanded by law to give away a product that they sell to earn their living. Giving away the report but not the score was a compromise between the government and the credit monitoring industry. And even the reports have limitations; you can only obtain one report, per bureau, per year.

But while you have to pay for the score, you don’t have to pay too much for it. There are a number of Websites that sell credit scores for $10 or so. Each of the three main credit bureaus also sell them directly. If you decide to purchase a copy of your score, make sure that the one you buy is your FICO score; that is the one that most lenders use to determine whether or not to grant a loan. Each of the bureaus uses a slightly different system to tabulate scores, and while there is a unified system that recently went into use, most lenders still prefer to use the FICO figure.

And you may not need to purchase a score at all. For most people, a copy of the free report is sufficient. With a copy of that, you can see if the information on it is accurate. If the information is correct and there are no indications of past due or delinquent accounts, you are probably going to be just fine if you apply for a loan. The people who have the greatest need to see their score are those who have a history of paying late or not at all. 

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