Free Credit Score: Is It Really Free?

In today’s banking environment, the decision to offer you a mortgage or grant you a credit card sometimes comes down to one simple thing: your credit score. Based on information in your credit report (no, they are not the same thing), this numerical rating provides an easy way to assess your risk of defaulting on a loan. No wonder, then, that consumers are eager to find out their score – and if possible, for free.

Over the past several years, a multitude of websites have popped up claiming to offer credit scores at no cost. But there’s a big problem with many of them: They’re not actually free.

When visitors sign up, they’re often enrolled, unwittingly, in a credit monitoring service that charges a monthly fee. In 2010, the Federal Trade Commission attempted to clamp down on this practice. It required “free” sites to provide a warning that, under federal law, the only authorized source for no-cost credit reports (though not free credit scores) is www.annualcreditreport.com.

Yet credit tracking companies have deftly maneuvered around those notifications. Freecreditreport.com, perhaps the most well-known of these firms, began offering credit scores for $1 (which it gives to charity) in order to avoid the FTC rule. Consumers who request their score receive a trial subscription to the Experian Credit Tracker service. If they don’t cancel it within seven days, they’re charged $21.95 a month.

This certainly isn’t the only site that’s been accused of misleading customers. In 2014, the company that operates FreeScoreOnline.com and FreeScore360.com agreed to reimburse customers $22 million as part of a settlement with the FTC and other plaintiffs.

While some websites use the term “free” liberally, there are actually more places than ever to get a truly no-cost credit report. Credit Sesame, Credit Karma and Quizzle are some of the better-known providers. Some others include Credit.com, Lending Tree, myBankrate, Mint, WalletHub and Creditcards.com.

Rather than making money directly from consumers, firms like these either collect advertising revenue or charge their lending partners a fee when they get a new customer through the site.

If you’re waiting for a catch, here it is: The numerical rating that these sites provide isn’t the FICO score that most banks rely on to make lending decisions. While the firms use the same basic information from your credit reports, they use a somewhat different mathematical formula to compute the score.

That’s not to say non-FICO scores aren’t valuable. They’re still useful for tracking overall trends in your credit and generally offer an approximation of what lenders use.

If you’re interested in seeing your actual FICO rating, you might want to check with your credit-card company or bank. A growing number of credit card issuers now offer scores for free as a way to entice new customers. They include American Express, Bank of America, Barclaycard, Chase, Citibank, Discover and Wells Fargo.

Anyone else may have to pay if they want their actual FICO score by visiting myFICO.com. The site offers single-time and monthly packages. The recurring ones run between $19.95 and $39.95 per month and include identity theft monitoring. The single-time package ranges from $19.95 to $59.85. Of course, the more you pay, the more features you receive. Instead of a credit report from one bureau, for example, you get all three with the middle- and top-tier products. You will also see scores specifically tailored for auto, mortgage and credit card lenders.

Just want to read your credit report without seeing your score? You can do that once a year, completely free, at www.annualcreditreport.com. The nice thing about this government-sanctioned site is that you can request reports from all three bureaus: Experian, Equifax and TransUnion. Because some banks use only one or two of the reports to make lending decisions, it’s always a good idea to make sure all three contain accurate information about your borrowing history.

While the FTC has tried to increase transparency, some websites offering “free” credit scores have found a way around those rules. If a website asks for your credit card before providing a score, expect to find a fee on your bill before too long. Of course, since there are resources to see this data for free, that's probably where you should start your search.