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Experian joins free credit score fray

Fred Williams

Get set for another slew of free credit scores from credit card issuers.

The big credit bureau Experian announced April 10 that it will let client financial institutions give consumers their VantageScore credit score, plus related educational information, at no charge.

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“We think there’s going to be interest from multiple lenders,” said David Proctor, vice president for consumer information services. The credit bureau is in talks with about a dozen financial institutions now, and the first roll-outs are expected to be announced in about two weeks. The free-score offer is available to major banks as well as neighborhood credit unions, the company said.

The move comes five months after FICO — the supplier of the standard credit score used by most lenders — announced a similar program allowing consumers to see their FICO scores for free. A number of credit card issuers have announced plans to include the scores on cardholders’ monthly statements, or via the Web.

FICO is the score used most often by lenders when they’re making a credit decision. VantageScore was developed by major credit bureaus in 2006. Although FICO is dominant, analysts estimate that VantageScore holds a 10 percent share of the market, making it a significant player.

Both scores are derived from an individual’s credit history, using formulas to determine the level of risk to a lender. The formulas examine past defaults or on-time payment history, the amount of overall debt, the level of available credit, and myriad other factors.

Experian’s move should further close the information gap that keeps many people from gaining control over their finances. Under federal law, everyone is entitled to one free copy of their credit report annually — but credit scores are not included in the mandate.  Given the credit score’s far-reaching consequences, it should be available to all.

The U.S. Consumer Financial Protection Bureau in February called for card issuers to provide free scores, saying the information can help consumers do a better job of managing their credit — and alert them to errors in their credit records, or even identity theft.

“Consumers often learn the importance of their credit standing when it is too late,” CFPB Director Richard Cordray said in a letter to issuers.

This latest push by Experian to provide free scores is hopefully another step toward eventually putting the three-digit number into every consumer’s hands.

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