The Fair and Accurate Credit Transaction Act of 2003 provided individuals with valuable rights to the credit information companies keep on them, but did you know that the credit score provided to you may be different than the one provided to lenders?
The first thing you should know is that you have a right to see your credit report once annually without cost. You can find free credit reports online at AnnualCreditReport.com. The report will contain important information that may affect your credit score.
While your credit report can be obtained for free, your credit score will cost you money, except in the case where you have been denied a loan on the basis of your credit score, in which case you may obtain your credit score for free. However, many banks and lenders are now providing their customers with free monthly credit score updates.
Your credit score is a numerical representation of your creditworthiness, which takes into account past and current credit activities, including any late payments, judgments, liens, bankruptcies, and foreclosures.
When you see an offer for getting your free credit score, it may be a marketing-driven incentive to get you to sign up for a fee-based credit monitoring service. The score may be only available at no cost if you agree to sign up for a trial subscription and don’t cancel prior to the end of that trial period. An important reminder: we believe in the preventative route of freezing your credit for free at all three bureaus (Experian, TransUnion, and Equifax) rather than paying for a service that will only reach out after your credit has been compromised.
The Little Secret of Credit Scores
Before purchasing your credit score, it's important to know that the score you see may not be the same score a lender sees. Different scoring models are used for consumer credit scores and lender credit scores, so the numbers can vary.
While the scores are often similar, they do not always match. Research shows that up to 27% of people could fall into a different credit score category than the one a lender receives.5 This means that even if you purchase your credit score, it may not fully reflect how a lender evaluates your creditworthiness.
While knowing your credit score can be helpful, reviewing your credit report may be even more important. Checking for and correcting any errors could help improve your credit profile and ensure your report accurately reflects your financial history.
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