Free Credit Report vs. a Credit Report from FICO
, by Rob Kaufman
Is one better than the other?
Free Credit Report... you've seen the commercials, the banner ads, the social media push and lots more. However, do you know what's missing from that free credit report? Your FICO® Score - the credit score used by 90% of top lenders to decide whether or not to give you a loan and what interest rate they'll charge.
There's absolutely no doubt that knowing what's on your credit report is crucial to understanding your financial profile. Plus, it gives you the opportunity to see if it contains any errors or signs of potential identity theft. So the question isn't, "Should I get a copy of my credit report?" The question really is: "Which credit report should I get?"
A Free Credit Report
Every consumer is allowed to receive one free credit report annually from each of the three major credit reporting bureaus - TransUnion, Equifax and Experian. The positive aspect about these free credit reports is that they're free. The negative aspects are two-fold:
Credit reports are constantly changing. Seeing your credit report data once a year gives you a snapshot of your credit status at only that one point in time.
The free credit reports you get from the credit bureaus don't come with a FICO® Score. Since most lenders use FICO Scores to determine your creditworthiness, not knowing this score weakens your advantage when trying to get a loan.
A Credit Report from FICO
It's nice to have a choice and that's what ordering your credit report(s) through myFICO is all about. You have the option to order a single bureau credit report (or 2 bureaus... or 3 bureaus) or get one report that shows combined information from all three bureaus. As you might have already figured out, a credit report from FICO isn't free, but the positive aspects of using myFICO can save you a lot of money down the line:
Since credit reports are constantly changing, myFICO provides access to reports that are updated on a monthly or quarterly basis depending on your subscription. This enables you to always know your credit profile and the data that has been added (or removed) from your report(s). This allows you to find and fix errors that might be causing lenders to charge you high interest rates and detecting identity theft problems before they get out of hand.
Along with your credit reports from FICO, you'll receive your FICO® Scores. And we're not talking about just your base FICO® Score 8. Included with your base scores are industry-specific scores - the scores used by many lenders for specific types of loans, namely: car loans and credit cards. So, when you're ready to apply for a loan and walk into a bank, an auto dealership or complete your application forms online, you'll be prepared. Knowing your FICO Scores can help you get the credit and interest rate you deserve.
A Free Credit Report or a Credit Report from FICO__ ? Which is right for you?
Although the differences between a free report and a credit report from FICO are apparent, it doesn't mean that one type fits all. See which works best for your near-term and long-term objectives and then make your decision. Either way, be sure to keep a consistent eye on your credit reports and FICO® Scores so you'll always be prepared when it comes time to apply for a loan.
For more info on free credit reports, free credit scores and FICO Scores, see the Credit Education section of the myFICO website.