Card Issuers Up Ante With Free Credit Score Data

Until late last year, consumers generally had to pay around $20 to see their credit score, the magical, three-digit number that often determines their financial fate. But some card companies are now offering customers access to their scores at no charge, a practice that regulators, along with consumer advocates, hope will become more widespread.

In late February, the Consumer Financial Protection Bureau said it has "strongly encouraged" other large card issuers to follow the lead of Discover Financial Services and the U.S. card division of Barclays, which have been providing free credit score information for the past few months. Almost immediately after the bureau's pronouncement, Capital One Financial said that it would start volunteering credit scores by mid-March. American Express is also looking into providing credit scores. "We are definitely very open to this," says spokeswoman Sravanthi Agrawal.

Other major card companies are more circumspect about their plans, but several of the largest issuers are in talks with credit score industry leader Fair Isaac Corp., according to FICO spokesman Anthony Sprauve.

Card issuers that provide credit scores for free already are looking for ways to differentiate their offering. For example, Barclaycard US emails its customers whenever their scores change, which alerts them to the effect certain behaviors have on their scores, while Discover is touting a variety of free tools that complement the scores in helping customers manage their finances.

FICO, which provides the credit scores that go to Barclaycard and Discover customers, says it's not charging the lenders, which already purchase the company's credit scores, any additional money for the right to provide scores directly to consumers. Instead it is reworking existing contracts to incorporate the service. Sprauve says the firm also is talking with mortgage and auto lenders about providing free credit scores to their customers.

Sprauve says that the information that Barclaycard and Discover are providing to customers is the same information that the card issuers themselves use. "It's not an educational score. It's not a theoretical score. It's the exact score that the issuer is using to manage that account," FICO's Sprauve says.

Capital One is taking a different approach, though. Rather than relying on FICO, the McLean, Va., card issuer plans to provide customers with an "educational credit score" from the credit reporting company TransUnion.

Capital One spokeswoman Pam Girardo acknowledges that the TransUnion score the company will provide to its customers is not the same score that Capital One uses to approve and price customer accounts. But the TransUnion score can be used in a wide range of online tools for managing credit profiles, she says. One of those tools is Capital One's "Credit Score Simulator," which allows consumers to see how their credit score would likely be affected by different events, such as paying off their balance, increasing their credit limit or taking out a mortgage.