A few years back I saw Cap track his FICO scores as he went about his personal finance business. In that eight chapter epic (here’s chapter one, there’s a list of each chapter at the top of the post), his score fluctuated as he took on 0% balance transfers for arbitrage, took advantage of credit card offers, and otherwise just did typical consumer stuff. At the time, his tracking tool of choice was a service offered by Providian, nowadays there’s a better option – MyFICO.
MyFICO is run by Fair Isaac Corporation, the company that designed the FICO score equation. The main idea behind their services is that your credit score is one of the most crucial statistics you have about yourself and, much to their benefit, a reflection of your ability to repay debts. So many things depend on your FICO score these days. I’m sure you’re aware that your credit is pulled when you request a loan or a credit card, but did you know it’s used when you apply for a job? It’s used when you apply for an apartment? It’s used a lot more often than you probably think. While I personally don’t track my credit score every single day, many people do and when they do, they use MyFICO. If you’re less hardcore about your score, you might do as well just using free credit score estimates.
MyFICO offers five distinct products (though I’ll only look at the first one today):
- ScoreWatch: ScoreWatch gives you 2 FICO scores and two credit reports per year from Equifax.
- FICO Credit Complete: FICO Credit Complete gives you all three scores in one shot.
- FICO Standard: FICO Standard gives you one score from any bureau.
- Suze Orman’s FICO Kit Platinum: Suze Orman’s FICO Kit Platinum gives you a total of three a year from the bureau of your choice.
- FICO Quarterly Monitoring: FICO Quarterly Monitoring gives you four a year from TransUnion.
ScoreWatch is the basic service that they offer and the one that most people use. You can try it for free for 30-days to see if it’s right for your needs, then it’s $8.95 a month or $89.95 a year. If you click through to the myFICO Score Watch page, you can watch a little video demonstration of the service. In a nutshell, ScoreWatch will give you your Equifax credit report twice a year, alerts when your information or your score changes (up or down), and alerts you when you might get a better rate on your loans.
The reason why people love this service so much is because they get historical data on their credit score as long as they are a member. People follow these scores like someone might watch a sporting events. In fact, Cap did this very thing in watching how his score was affected by his various 0% balance transfer arbitrage applications.
Looking at the dashboard, you can your current score in huge letters to the left. Underneath it, you can see how you stack up against other U.S. consumers. The chart to the right is where the payoff is, the graph of how your score has changed as time passes (the right sidebar on the graph even has sample interest rates for you to see how much you’d pay at different points in your life).
So why is this valuable? Why do people track things so closely? They do it because they’re getting close to a loan. They do it because they want to stay on top of their scores and know why things are going up and down. Cap discovered that taking on a 0% balance transfer punished his score because his debt to total credit limit ratio was high. However, after the balance transfer ended, he saw that his score recovered and actually improved over the time. It improved because he showed a 12 month period of established credit, regular payments, and generally strong creditworthiness.
You may not be able to see it in the chart but the difference between a score under 700 and a score above 700 is over three percentage points on a 48-month auto loan. The rate for a sub-700 credit score is 8.41%, or higher, and the rate for a 700+ credit score is 5.96%, or lower. The folks keeping a diligent eye on their credit scores know this and are trying to time it such that they request a loan when their score is above 700.
There is only one reason why someone without a financial incentive, because of an upcoming loan, would want to keep a close watch on their score: identity theft. If someone takes out credit in your name, your credit score will be affected. If it suddenly goes down and you didn’t do anything to adversely affect it, chances are you need to investigate it further to ensure you haven’t become a victim of identity theft. At $8.95 a month, it’s priced about the same identity theft services like LifeLock and ProtectMyID, though you get your credit scores each month from Equifax.
MyFICO Coupon: SURVEY30
If you are going to sign up for the service, be sure to use this 30% coupon code – SURVEY30. I would try the 30 day trial first, to see if it’s right for you, then pay if you find value in it. There’s no sense paying $90 for a service you won’t need.
If you have any experience my MyFICO, please let me know!