Card companies offer free credit score

Consumers often resolve at the start of the new year to do a better job managing their finances. A few credit card companies are now aiming to help by including a key piece of information on customers’ monthly bills – their credit score.

Your credit score can determine whether you get a credit card, car loan, or mortgage – and at what rate. Utilities, mobile phone carriers, insurance companies and even your landlord can get access to it. Yet only 42 percent of consumers know their credit score, according to 2013 survey by the American Bankers Association.

Knowing your credit score is like knowing your cholesterol level.

“Once you know it, you can figure out how it stands and we provide information so people can see – is it a good score or is it a not so good score,” said Roger Hoshchild, president and chief operating officer of Discover, the first major credit card issuer to provide customer’s FICO score for free on monthly statements. “And then we also provide them with information on what they can do to improve their score.”

Discover, which started providing free FICO scores to some customers in November, hopes to attract new customers and build customer loyalty among its more than 10 million card members. All Discover cardholders should see a free credit score on their bills by the end of February, Hochschild said.

creditscore FICO is the credit-scoring formula most widely used by U.S. lenders. Barclaycard, a division of London’s Barclays and First Bankcard, a division of First National Bank of Omaha, are also providing free FICO scores to their customers.

More credit card issuers could do the same. “The program is open to all lenders, whether it’s a mortgage company, a bank, or a financing company,” said Anthony Sprauve, FICO’s senior consumer credit specialist.
Any company that offers a credit and purchases a FICO score can now make that score available to their consumers, he said.

FICO normally charges $19.95 for a single score, purchased through MyFICO.com based on consumers reports from one of the three major credit reporting agencies: Equifax, Experian, and TransUnion. However a few websites, including CreditSesame.com and CreditKarma.com, offer free credit scores.

Knowing your score can make a difference, says CreditKarma.com co-founder and CEO Kenneth Lin.

“Our experience is that when consumers actually have access to their score, they behave a little bit better,” Lin said. “The rationale is if you’re actually taking the time and the effort to look up your score, than on the average, you’re going to be a slightly better consumer.”

“At first glance, having your credit score staring back at you from your credit card statement should move people toward more responsible credit behaviors,” said Gail Cunningham of the National Foundation for Credit Counseling, whose member agencies provide financial counseling to millions of consumers each year. However, many customers may not even notice the number. “The problem isn’t a lack of tools, but a lack of action on the consumer’s part,” she said.

So will putting a customer’s credit score directly on their credit card bill significantly reducing late payments and defaults? Discover says it too early to tell. Other card issuers may wait for the answer before following suit.

Read more personal finance stories

3 financial resolutions for a happy new year
How to talk to an employer about your 401(k)
Retirement reality check: Time to get a grip

By CNBC’s Sharon Epperson. Follow her on Twitter: @sharon_epperson. Send comments and questions with #getaplan.

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