Free Credit Scores Available Now! How Can You Get Yours?

Some great legislation has gone into effect as of January 1, 2011. For the first time in history consumers will have access to their free credit scores if they receive an interest rate on a loan (or credit card) that is above the best rate offered to other consumers.

The regulation, a somewhat belated result of the Fair and Accurate Credit Transactions Act of 2003, orders credit card companies and other lenders to provide this information through a so-called “risk-based pricing notice” plus a credit report or with disclosure of the consumer’s credit score (Creditcards.com, 2011).

So, if you apply for a credit card with an interest rate of 10%, but are approved for the card at a 10.25% interest rate (anything higher than what other consumers are offered), you will be entitled to receive your credit score or a risk-based pricing notice with a credit report.

The risk-based pricing notice:

  • Applies to lenders who use credit report information to set credit terms (such as APR – The yearly cost of a loan, including interest, insurance, and the origination fee (points), expressed as a percentage.)
  • Does not apply to insurers, landlords or other non-lender users of credit reports

Requires that consumers be notified that

  • Credit terms have been set based on information in their credit report
  • Their terms may be less favorable than the terms provided to consumers with better credit histories
  • They can obtain a free copy of their credit report

The buzz in the industry is that many credit card companies will opt to provide the free credit score, because it is simpler for them to implement. Since this legislation is newly enacted, the result remains to be seen, however consumers who receive the credit score may be at a disadvantage over consumers who receive the credit report.

A credit score is the numerical grade for your credit report. It does not show you what information on the report may be negatively impacting that score. Your credit report will show you positive and negative items and provide you an opportunity to correct any errors that may be showing.

If all you receive is your score, order up a copy of your credit report too. You can obtain a free copy by visiting www.annualcreditreport.com. If you need help understanding your report, contact an accredited credit counseling agency. Their certified credit counselors can help you:

  • Dispute or correct errors,
  • Understand your options for managing your debts, such as using a debt management plan, debt consolidation, working directly with your creditors and more
  • Create a plan for improving your financial situation and long-term credit standing

For those of us who have been frustrated when we have not received the best available interest rate on loans and credit cards, it will be nice to have a free glance at our credit score or credit report. However, the best answer is to know what is in your report before you apply for any type of loan. Get a free copy of your credit report from AnnualCreditReport.com or for, around, $16 you can purchase one with a score from any of the three major bureaus: Equifax, TransUnion or Experian.