Your Take 
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Your Take: How Often Do You Check Your Credit Score?

Red LED ScoreboardI’m a numbers guy. I love seeing numbers, trying to find trends, and playing with statistics. That’s probably one of the reasons why credit scores fascinate me so much, they are able to distill a bunch of actions you take as a person and package it up into this convenient three digit number that lenders go nuts over. I’m not saying the system is good or bad, but it’s the system and you have to play by the rules of the game.

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 Credit 
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How To Get An Experian Credit Score

ExperianIn February this year, Experian did something that “shocked” the credit score enthusiasts world (yes, such a world exists and they have a very vibrant and very knowledgeable community in the myFICO forums): they announced that they would no longer be offering Experian credit scores to myFICO users. Many on the myFICO forums were furious.

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 Credit 
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How To Get A Free FICO Credit Score

Your FICO credit score is increasingly becoming one of the most important numbers in your life. I’ve written about what’s in your FICO credit score as well as how to get FICO credit score estimates, but never how to get the actual three-digit FICO score calculated by one of the bureaus.

While the Fair and Accurate Credit Transaction Act (FACTA) and Fair Credit Reporting Act (FCRA) did wonders to shed light on the credit reporting industry and the data they are collecting on all of us, the light wasn’t bright enough. There is no way for you to get a free FICO credit score unless you sign up for a trial with one of the bureaus or with Fair Isaac Corporation directly.

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 Credit 
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Understanding FICO Credit Scores

For the first twenty years of your life, the most important measure of your future were your grades in school. Scored well, you got into better schools and tougher classes. Scored poorly and you didn’t. Just about the time I thought grades stopped mattering, I learned about my FICO credit score.

This little three digit number has caused so much consternation in its lifetime you’d think it was invented hundreds of years ago. Would it to surprise you to learn that the FICO score, for all its flaws, is actually an improvement on its predecessor? Before the Fair Credit Reporting Act in 1971 (full text of the FCRA), credit reporting agencies did whatever they wanted.

They collected whatever information they could find and sold it to whomever was willing to pay. The idea of a “credit score” didn’t emerge until the 1980s when Fair Isaac Corporation (FICO) put the data through a magical black box equation and spit out a three digit FICO score.

Pique your interest? Enough of the history lesson, let’s learn about FICO scores, how they are calculated (as best we know), and get on with this Foundation Series post!

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 Credit 
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MyFICO ScoreWatch Review: Perfect for Credit Score Junkies!

30-Day Free TrialA 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.

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 Credit 
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Free FICO Credit Score Estimates

Your FICO score has become one of the most important indicators of your credit worthiness and so many people are very interested in their score. Credit bureaus know this and so they often sell services that let you see what score they’ve given you. Your credit score is important but for many it’s far more important to pue $30-50 a month away into an savings, so enter in FICO credit score estimators.

Below I’ll talk about two FICO score estimators that I feel are trusthworthy enough to work with. There are a lot of websites out there offering a free FICO credit score or a free FICO credit score estimate that are really just front pages for scams getting you to sign up for monitoring services or other pay services (or they’re out to steal your identity!). Don’t use those. I feel the two services below are the only ones you should trust.

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 Credit 
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TransUnion Free Credit Score Settlement

If you had a credit card, loan or credit account between January 1987 and May 28th, 2008, you are eligible to file a claim in a preliminary settlement of a class-action lawsuit (though not slated to be approved until September, though it’s probably going to happen). That’s a whole lot of people. The lawsuit was filed eight years ago in Chicago and alleges that TransUnion sold consumer profile information to businesses, which is a violation of federal law. What started in Chicago certainly didn’t stay there, eventually there were 14 federal lawsuits. Yikes!

(Thanks to Cap, if you used TransUnion or TrueLink between December 1, 1999 and April 16, 2007, you can get three months of credit monitoring through a settlement in the Robert V. Townes, IV v. TransUnion, LLC and TrueLink, Inc. case, deadline for that settlement is July 22, 2008)

What Do You Get?

You may be eligible for one of two options:

(1) Basic relief. Free credit monitoring for six months, which gives you daily access to your credit report and credit score and 24-hour credit-monitoring service. This normally costs $59.75. Those who elect this option may get a cash payment if there’s money left from the $75 million settlement fund.

(2) Enhanced relief. An alternative enhanced set of services” in exchange for a full release of claims. This options includes nine months credit monitoring, a suite of insurance scores and TransUnion’s mortgage simulator service. This option normally would cost $115.50. You won’t be entitled to any cash payment under this option. [Source: Phuong Cat Le of SeattlePI.com]

What Are My Option?

Option 1, basic relief, is the only one where you could potentially get money (if there’s any left over). If you elect basic relief you can get the free credit monitoring for 6 months or a $59.75 cash payment. I don’t think there will be any cash left over in the $75 million settlement fund (there never seems to be, plus you figure with the internet and how fast information spreads, you’ll get a pretty high percentage of the estimated 160 million eligible Americans registering for this).

Option 2, enhanced relief, has no cash out option and comes with three aditional months of credit monitoring, and a “suite of insurance scores.” There’s conflicting interpretation of “suite of insurance scores.” Some news outlets are reporting that it’s your credit score, others call it a different score that insurance companies use to determine your rates. I didn’t know that there were even separate scores (there may not be) in the first place. Bottom line, you will get a credit related number for free that you otherwise would’ve had to pay for.

My Thoughts

  1. All the estimates put the settlement cost in the billions, yet TransUnion said they’d earmarked $75 million (this could always go up). They must not think people are going to sign up for this.
  2. Option 1 seems more like a waste of time for the consumer and a boon for TransUnion. Getting credit monitoring for six months and then not renewing is like getting life insurance for six months and then canceling. Sure, you’re protected for six months but then what? Maybe you forget to cancel something or end up renewing the service, both earn money for TransUnion (turn a big long lawsuit in a money making venture, brilliant!). I wonder if we’ll hear complaints in six months (maybe I’m just cynical) about it. Nix that, no credit card will be required.
  3. Option 2 seems a little better, though it still has the failings of Option 1, but you get to see some credit related score for free.
  4. If you aren’t interested in either option, I’d register for Option 1 and see if you can get cash; that’s likely what I’ll be doing. I think we need to see the options all spelled out and finalized before reserving judgment.

How To Participate

First, you’ll have to register. After June 16th, 2008, you can register online at www.listclassaction.com or by calling them up at 1-866-416-3470. As of May 31st, the website doesn’t work yet.

Lastly, you can always get a free copy of your credit report, thanks to Federal Law, through AnnualCreditReport.com.


 Credit 
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Do-It-Yourself Identity Theft Protection

Identity TheftLast Friday I discussed the CEO of LifeLock’s appearance on the Today Show and how many of the services they offer are things you can do yourself. So, rather than leave it all vague, here’s what you can do for a do it yourself solution.

AnnualCreditReport.com

Through AnnualCreditReport.com, you can request a copy of your credit report from each bureau once a year. I generally like to stagger it every 4 months so you can keep up to date absolutely free. For example, get your Experian in January, then your TransUnion in May, then your Equifax in September, then Experian again the following January.

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