Credit Scores Should be Free!

Karen Blumenthal of the Wall Street Journal asks why consumers have to pay get credit scores.

As important as credit scores are to consumers, they currently have to pay fees to Experian, Equifax, Trans Union or others to get their own scores. The report states this could change.

In March, bills were introduced in both the House and Senate that would give consumers access to free credit scores once a year.

The report points out that credit bureaus sell dozens of different credit scores, some intended only as “educational” for consumers, some generic ones for lenders and some tailored for mortgages or car loans. That means even when you get your hands on a credit score, it can be difficult to know exactly what you have received.

The familiar FICO score is reported on a scale of 300 to 850 is the most widely used. The three major credit bureaus joined together to create a competing score, the VantageScore, which some lenders now use. It has a scale of 501 to 990, making it hard to compare with the FICO score.

The bureaus make a lot of money selling credit scores to consumers. Experian recorded $410 million in revenue from its consumer division for the six months ended Sept. 30, up 7% from a year earlier. Equifax’s “personal solutions” revenue grew 13% in 2012, to $204.5 million, and the unit had a gross profit margin of 30%.

CreditKarma.com offers a free TransUnion TransRisk score, on a scale of 300 to 850, as well as a VantageScore. CreditSesame.com offers a free Experian National Equivalency score, with a range of 360 to 840. Credit.com also offers a Vantage score adjusted to a scale up to 850, to be more comparable with FICO scores. Some banks are offering free credit scores to their customers.

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