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Credit scores matter to everybody these days. Whether applying for a loan, an apartment — even a job — or buying insurance, your three-digit number can help determine companies’ perception of your creditworthiness and financial character.
Up to now, getting that precious number has been such a hassle that half of the American public has not done it, according to a survey by the Consumer Federation of America. Part of the reason is complexity. There are at least half a dozen scores out there to measure your credit risk.Cost is another factor. While you can get your credit report for free, thanks to a federal law, each score costs around $15 in fees from the credit bureaus and credit scoring companies.There are a number of "free" offers by credit bureaus, but they require a credit card number to pay for an identity theft protection program. You can cancel the service before incurring charges, but the hassle and worry that it won’t be canceled in time drive many consumers away.Now two California companies are giving out credit scores for free — no credit card number required, no contact from the company unless you check the box that says you want it, no pop-up boxes with offers to lower your credit card costs or get a loan.Evan Hendricks, author of Credit Scores & Credit Reports, said free access to credit scores is the next step in the process of full disclosure of credit information for consumers that started in 2000 when California gave mortgage applicants the right to see their credit score."It’s an important milestone in the evolution of transparency of credit information and credit scores," he said. "I testified in the last session of the House Financial Services Committee in Congress, and one of the representatives asked why we don’t make credit scores available for free. I was the only one testifying who agreed with him."Credit Karma.com, which launched its Web site in March 2008, now has close to 1 million users who have checked out their score, according to Ken Lin, founder and CEO of the San Francisco company."People are so worried about ID theft and their credit these days, it really helped with growth," Lin said. "Credit scores have been a very opaque process. There’s been very little visibility on how it works."No longer. Credit Karma buys your credit score from the TransUnion credit bureau and gives it to you free, along with a breakdown on how the score is calculated and tips on how you can raise it. It also offers to remind you once a month to check your latest score as a way to monitor ID theft and keep tabs on your score before you need a loan, although you have to opt in to receive any e-mail from the company.An expanded version of that idea was launched this week at Credit.com, a consumer education and financial services company also based in San Francisco. At no cost to you, Credit.com will download your TransUnion credit report, analyze it and show how you rank on six credit scores, including FICO, Vantage, PLUS, TransUnion and Credit Xpert.
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