Totally Free Credit Score - No Such Thing

There's a lot of confusion about the difference between credit reports and scores, where to find them online, and how to get a totally free credit score with no strings attached. So this blog post, I'll try to clear up some of the confusion that surrounds this subject.

First things first. Let's talk about the difference between reports and scores, since many people think they are one and the same.

• A credit report is a record of your financial history. It includes information about your past and present credit accounts, loans, payment histories, collections (if any), and other related items. You have three different credit reports, one for each of the reporting bureaus -- TransUnion, Equifax and Experian.
• A credit score is a numerical representation of your report. The FICO credit score is the one most commonly used by mortgage lenders, and it ranges from 300 - 850 (higher is better). You have three scores, one from each of the reporting bureaus, and they can all be slightly different.
  

Understanding the difference between these two things is the key to eliminating confusion. It will also help you understand why there's no such thing as a totally free credit score.

The Myth of Totally Free Credit Scores

In accordance with the Fair Credit Reporting Act (a federal law enforced by the FTC), you are entitled to one free credit report per year, from all three of the reporting bureaus mentioned earlier. You can do this once a year free of charge, and the best place to make your request is through the FTC-approved website at AnnualCreditReport.com.

However ... there is no federal law that entitles you to a totally free credit score. Remember, your score is different from your reports. Now, here's where things get a little confusing. But I'll do my best to keep it simple.

If you want to get a totally free credit report from Equifax, TransUnion and Experian, you can do that right now by visiting the AnnualCreditReport.com website. On the other hand, if you want to obtain your credit scores as well, you will have to pay for them in some way, shape or form.

On some webites, you will see an advertisement for "3 Free Credit Reports and Scores." But this will always be followed by an asterisk and a disclaimer of some sort. Usually, you have to sign up for some kind of credit monitoring service / identity theft protection. You'll have to pay a monthly fee for this service, but you can cancel it anytime. So you can see that it's not a totally free credit score because you've had to sign up for something in order to get it.

You can also purchase your credit scores directly from the reporting bureaus mentioned above, without signing up for any kind of monthly service. You can request it through the MyFICO.com website as well. You will probably pay between $15 and $30 for a single credit score, depending on where you get it.

So let's sum up what we've discussed so far:

• Your credit reports and scores are two different things.
• Federal law entitles you to one free credit report per year, from all three bureaus.
• There really is no such thing as a totally free credit score with no other purchase required.
• You can buy your scores individually or in conjunction with a monitoring service.
• Either way, you're going to pay for the score in some fashion. So it's not totally free.

In closing, I'd like to make an important point on this subject.

It's Still Worth the Money

I'm not saying all of this to dissuade you from purchasing your credit scores. On the contrary, I encourage you review your scores before applying for a mortgage loan. I just want you to understand how the process works. My goal with this article is to help you navigate your way through all of the marketing hoopla to get what you're after.

So even though you can't find a totally free FICO score online, it's still worth the money. You can sure that a mortgage lender is going to review this information when considering you for a loan, so you should preempt that by reviewing your own credit situation -- before applying for a loan. You also need to know where you stand, in terms of your score. If it's low, you should focus on improving your credit so you can get qualified for a good loan with a decent interest rate.

I hope this article helps you understand the world of consumer credit and how all of these things tie together. If you'd like to learn more about this topic, check out the credit section of the main website.