Consumers are not legally entitled to free credit ratings. However, the Consumer Financial Protection Bureau (CFPB), the country’s financial watchdog responsible with safeguarding consumers, started pressing banks and other organizations to give people access to credit scores and other educational information in 2013.
When it first began offering customers free access to their credit scores in 2010, Credit Sesame outdid them. The power of knowledge. Knowing your financial situation will help you make the right decisions. Knowing where you are and where you need to go are related concepts.
Credit ratings weren’t always free, right?
No. Prior to a few years ago, credit ratings were closely guarded trade secrets owned by credit scoring companies, and were only sold for a fee. Even while each of us is entitled to a free credit report from each bureau once a year, the reports still do not include free credit scores. Scores were treated as a commodity and available for sale because there was no requirement to disclose them by law. Before, you had to ask a lender to share your credit score with you after they had pulled your credit as the only method to obtain one for free.
What distinguishes the various credit scores available?
Each of us has several different credit scores. Your credit scores are snapshots in time that reflect the information in your credit file. Each of the three biggest consumer credit reporting agencies, Equifax, Experian, and TransUnion, has a credit file on you. You also have credit files from smaller organizations. The information in your files may differ since not all creditors submit reports to all three agencies, which is generally the case.
Additionally, there are other methods for determining your score. These are referred to as scoring models or algorithms. They are intricate calculations that analyze the information in your file to assess your likelihood of repaying future obligations. These evaluation techniques evolve throughout time. The FICO® Score is the most modern FICO® scoring model.
Additionally, algorithms are improved based on the demands of the sector. In other words, if you apply for a vehicle loan, for instance, the lender will likely see a credit score that gives your past with auto loans greater weight. The majority of auto lenders utilize the FICO® Auto Score 2 or FICO® Auto Score 8. The lender must buy your score, but not necessarily the most recent scoring formula. You can submit applications to two vehicle lenders on the same day who receive two separate scores.
Similar to mortgage lenders, credit card companies also receive customized scores for their specific credit products.
Consumer or educational scores are free credit scores. They may not exactly correspond with the scores lenders view, but they are meant to give you a sense of where your credit stands. Any of the credit reporting agencies may offer consumer credit scores that are based on the FICO® or VantageScore® scoring models.
Confused? Don’t stress over the specifics. The range that your scores fall into is more important. In general, no matter which score you see, if you have solid credit, the score will be in the good range. A wide range of scores is not always cause for concern.
Is my free credit score accurate, and who provides it?
Free credit scores are provided by several businesses and financial organizations, including Credit Sesame. The free credit score provided by Credit Sesame is a VantageScore®-based TransUnion educational score. It could not match the credit score a lender sees. We give it to you in order for you to take control of your money and have access to better, more inexpensive credit options.
Your bank or credit card provider may also be able to provide you with a free credit score. Even though your possible lender is the same organization that offers the free score, these are still academic scores and may differ from the score a lender sees.
How do businesses that offer free credit ratings generate money?
Any business that provides you with a free credit score also sells things that make money. The credit score is still valid despite this. In actuality, the reverse is true. The issuer of the free credit score is in a unique position to recommend to you the appropriate financial goods based on your credit profile, items that may end up saving you money over time or offering other advantages.
Every day, Credit Sesame analyzes debt. We might present you with lenders who can give you a cheaper interest rate than you presently pay based on your credit standing. We only present you with offers that we believe you can accept. Credit Sesame receives a small commission if you click the offer and get approved. You do not pay this commission; the lender does.
Everyone benefits in the long run. The lender gains a new client, you receive a better deal that could result in tens of thousands of dollars in savings over the course of a loan, and we get paid for making your financial situation better.
What benefits come with utilizing Credit Sesame?
Credit Sesame’s free credit score is superior to your bank’s free score because, in addition to a huge library of credit education, we also offer a free credit report card, $50,000 in free identity theft insurance, free credit monitoring alerts, and other perks.
It never lowers your score to check your personal credit using Credit Sesame.
Your personal information is never sold or given away by Credit Sesame.
In a nutshell, what you need to know about your free credit score
Know where you stand. Knowing where you stand will allow you to compare credit offers and select the best one. Additionally, you might attempt to raise your credit score to increase your savings.
Never purchase a credit score. The major credit bureaus all sell credit scores. These scores are no better than the free score provided by Credit Sesame and are also educational. In fact, two of the main three credit bureaus were fined $23 million in the beginning of 2017 for misleading consumers into thinking they were buying the same scores that lenders utilized.
Regularly check your credit reports. Utilize your access to free annual credit reports from all three main credit reporting agencies (through AnnualCreditReport.com), and look into any Credit Sesame credit monitoring alert you receive. Your score might be lowered by mistakes and identity theft, which could cost you money.
Watch your credit report card carefully. We’ll let you know precisely what’s lowering your credit score so you can chart a route toward better credit.
Pay attention to the advice from Credit Sesame. The offers you see on your Credit Sesame dashboard have been hand-picked because they can help you save money.
Over the past seven years, the market for free credit scores has expanded. Finally, creditors have realized that a customer base with higher credit understanding increases sales. Clients with excellent credit are more attractive as customers since they are more likely to return their bills, even though those with bad credit still have to pay more. The power of knowledge. Grab it.
Your defender is Credit Sesame. We give you access to your credit score so you can accomplish your financial objectives.