Free Access to Your Credit Score

How many of us know our credit score? Sure, we hear a lot about its importance to our financial lifestyle, but very few of us regularly check this all important number.  Granted, receiving your score is only one part of understanding your creditworthiness, and to fully comprehend our overall situation we must look at these numbers in conjunction with our credit reports.  However, it is good to know your score because it provides a base from which you can develop a plan to improve your credit standing. Well, thanks to new federal regulations, you and I will have increased access to our scores beginning July 21, 2011.

We all know that the lower your credit score is, the more you’ll pay in interest when you finance a purchase, and the more you pay in interest, the less you’ll have available to build wealth. You should also recognize that a poor credit  history can impact other aspects of your life.  That’s because your credit is reviewed by a variety of sources these days. Landlords, employers, utility companies, and other lenders routinely review your credit before making a decision about you, not only to evaluate your creditworthiness prior to extending credit, but also to monitor your financial behavior throughout the relationship.   Not knowing where your credit stands at any given moment can have unintended consequences, so experts recommend that you understand your credit profile entirely. The new, increased access to credit scores will provide you with one of the necessary tools to do just that.

The Federal Trade Commission and the Federal Reserve Board jointly announced their rules for implementing free credit score notifications under the Dodd-Frank Wall Street Reform and Consumer Protection Act. Effective July 21, when a credit score is used to establish or modify your credit terms on credit cards, auto loans and student loans, lenders will be required to share the score used to evaluate your financing request in situations where you are negatively affected. Essentially, those of us who are denied credit, or approved at a higher rate than suggested, will receive a notice from the lender detailing the score used in their decision.   Furthermore, if your score is used to reevaluate your current credit accounts and the review results in an increase in your interest rate, you would receive a similar notice.

What’s really helpful is the additional information lenders will be required to disclose when a credit review results in the provision of a free credit score. According to the legislation, lenders will also be required to furnish the range of possible scores under the model used to generate the score, the date the score was obtained, and the name of the consumer reporting agency – the three major credit reporting agencies are TransUnion, Experian, and Equifax.  Now, the really good part is that lenders will also have to provide up to four key factors that hurt your credit score, or up to five factors if the number of inquiries made into your credit report was a key factor in their decision about you.  These factors are helpful because they detail areas of concern within your profile – essentially showing you what might make any lender worried about doing business with you. Knowing where to focus your efforts to improve your credit profile will help you formulate a plan to get your credit back into shape.

As mentioned earlier, your credit score is an important factor in understanding your creditworthiness; however, a thorough review of your credit reports is key to understanding your overall profile.  Although the new law provides free access to the score associated with an adverse action, you still have two other scores that are not reviewed.  You’ll recall that there are three credit reporting agencies, so the score provided to you is only one of three pieces in this puzzle.  You may purchase your other credit scores; however, taking a look at your credit reports may actually be more helpful.  Your score distills the information contained in these reports into a three digit number—generally between 300 and 850, the higher the better.  So, your score simply provides a snapshot of your standing.  The information you will need to focus on is contained in your reports, and thankfully you can receive copies of your credit reports for free by visiting .


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