Discover Financial Services is breaking ground in customer relations and financial management. They recently announced the decision share FICO scores with their Discover It card members for free. This move makes them the third creditor—after Barclaycard US and First Bankcard—to provide this service.
Receiving FICO updates on your monthly credit card statement is an undoubted bonus in the consumer world. It also raises a few essential questions:
We delve into the specifics here, but the basics of a FICO score are:
- A number or “score” ranging from 350 to 850 is assigned to you based on the information in your credit reports. The higher your score, the better your credit rating.
- The Big Three—TransUnion, Experian and Equifax are the credit bureaus that house your information.
- Lenders use varying methods to calculate potential customers’ FICO scores. For example, your mortgage lender’s FICO formula may provide a higher score than your car dealer’s formula, or vice-versa.
- Consumers usually pay for access to their FICO score, e.g., myfico.com is currently offering a 30-day trial for $4.95 (increasing to $14.95 per month after the trial period ends). Keep in mind, this score may be different from the score used by creditors based on their individual calculation methods.
According to a November 18 press release, the decision was made to help customers gain financial insight with greater ease:
“By providing card members with their free FICO® Score on their monthly statements, we’re helping them manage their finances so they can achieve their personal goals,” said Julie Loeger, senior vice president of brand and acquisition at Discover. “A good credit history and FICO® Score can be a deciding factor in a person’s ability to get a loan or receive a good rate that will enable them to buy anything from everyday purchases to a new home. We think Discover customers deserve to have ready access to this information and should not have to go through hurdles to get it.”
No. Federal law requires creditors to clearly outline the terms and conditions of the services, allowing consumers to make an informed decision before signing up. The FICO score is offered free of charge to Discover It cardholders, but don’t take my word for it. Do some research to learn more about the card’s terms. Education eliminates the element of surprise.
It might be worth it to see what Discover Card offers, but don’t apply for new credit based solely on the perks. Before signing up for any line of credit, ask yourself the following questions:
- Do I need a new credit card?
- How will a new card affect my credit score? Will adding another revolving account overload my credit report?
- Have I read the terms and conditions of the card in question? Do I agree with them? Do the benefits of the card outweigh the costs?
- What does this credit card offer that others don’t?
The bottom line: Choosing a credit card should be based on a number of factors. If you are unsure of the next step, talk with a professional about how a new account could affect your credit report.
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