More Americans getting free FICO scores

Fair Isaac inks deal to let credit union members see once-secret score

By Martin Merzer

Not long ago, you'd have an easier time cracking open the safe at your bank than persuading the bank to crack open its files and give you a look at your own credit score.

Now, a growing number of Americans are gaining regular, free access to their scores -- the most crucial indicator of their creditworthiness -- and consumer advocates are praising the move.

"More information is always better than less," David Jones, president of the Association of Independent Consumer Credit Counseling Agencies, which represents 37 nonprofit credit counseling companies, said. "This is a little amazing to me, and it's a very good thing for consumers."

His comments came on Jan. 16, 2009, one day after Fair Isaac Corp., creator of the widely used FICO credit score, announced that all 200,000 members of the Pennsylvania State Employees Credit Union (PSECU) will be eligible to receive their FICO scores every month -- and without charge.

That brings to 1.5 million the number of Americans with such access, including customers of the Sears Solution MasterCard issued by HSBC and Washington Mutual. (WaMu now is part of J.P. Morgan Chase, which says it is evaluating the free FICO feature. "The score won't be displayed after March 1, but it may be displayed at a later date," said Paul Hartwick, a Chase spokesman.)

No other lenders currently offer the service, but  Fair Isaac hopes to extend the program -- called FICO Scores On Statements -- to a much greater degree.

And Fair Isaac hopes to extend the program -- called FICO Scores On Statements -- to a much greater degree.

"By knowing and understanding their FICO scores, consumers can gain important insights into managing their credit, and in the process, become better borrowers and savvier users of credit," Shon Dellinger, vice president of myFICO for Fair Isaac, said in a statement.

Consumer advocates and industry officials called this a step forward for at least two reasons:

1. Love it or hate it (and most people don't love it), the FICO score is a reality and it's a key component of most Americans' financial lives. It's part of the basis for billions of credit decisions a year, including more than 75 percent of mortgage applications. The score also is used by credit card companies, auto dealers and many other entities to assess how likely you are to repay your debts -- and that determines whether you get a loan, and at what interest rate. 

When it comes to credit cards, the higher the score, the higher your credit limit. The FICO score ranges from 300 to 850, with anything around 800 considered "outstanding," according to Jones.

"Fair Isaac's score is the most respected credit score in the business," he says. "And it's a huge moneymaker for them."

2. Historically, your FICO score has been as well guarded as the nation's daily nuclear launch codes.

Credit bureaus prohibited lenders from sharing the score with loan applicants under any basis, even for a fee. They said consumers would be confused by it. What they didn't say, publicly, was that they didn't want the hassle of dealing with consumers angered by their scores -- and the implications of the scores.

That persisted until 2001, when California lawmakers began requiring credit bureaus to share the score with any state resident who applies for credit.

That was the first crack in the wall. Within a few years, consumers anywhere in the United States could get their scores for a fee (now generally around $16 when bundled with a complete credit report)

Now, under Fair Isaac's Scores On Statements program, more and more people have free access to the score -- and on a continuing basis.

They can obtain the scores through password-protected online services of participating banks and credit unions, and monitor any changes month by month. Fair Isaac sees this as another profit center, given that credit unions and banks will pay an additional fee for the right to share the scores with their customers.

In addition, these bank and credit-union customers have access to information to help them interpret and improve their scores, which Jones says is critically important.

"It remains to be seen if the consumer knows what to with this information," he says.

Still, the bottom line?

"If you have access to this," Jones says, "you absolutely should go for it."

See related: Free credit score estimator, Archive of stories about credit scores, credit scoring

Updated: January 21, 2009

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