Apps that offer free credit scores have major drawbacks

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Popular apps that give you free access to credit scores often have hidden costs and may not provide the information you need to see, according to a new Consumer Reports investigation.

Federal law states that each year, every American can access one credit report from each of the three big credit reporting companies — Equifax, Experian, and TransUnion. But credit Reports Generally not including credit grades.

Consumers generally still have to pay to see their credit scores, although there are a number of ways to see these scores for free. In fact, some companies have created apps that promise to give consumers a glimpse of their results.

However, CR found that these apps often leave a lot to be desired. In a press release, Syed Ijaz, Financial Policy Analyst for Consumer Reports, said:

“Most of the apps we examined offer credit scores that lenders typically don’t use and come with other drawbacks, such as unnecessary costs and privacy risks. No one should pay extra and trade their personal data to private companies just to access their credit information.”

The CR investigation looked at five common applications:

  • Karma credit
  • sesame credit
  • Experian credit report
  • MyFICO
  • TransUnion: Outcome and Report

CR found that three of the five apps provide access to credit scores that lenders do not typically use when assessing the creditworthiness of potential borrowers.

As one might expect, only MyFICO provides access to the FICO score used by the vast majority of lenders, as does the Experian Credit Report. Unfortunately, MyFICO charges $19.95 per month and the trial credit report charges $19.99 per month – over $200 per year.

Perhaps worse, four of the five apps — Credit Karma, Credit Sesame, Experian Credit Report, and TransUnion: Score & Report — require consumers to pay for access to their credit reports, says CR.

Paying for such reports is usually not necessary, especially now. By law, consumers can obtain these reports for free once a year simply by visiting the website. Additionally, until April 2022, consumers can access these reports for free on a weekly basis.

CR says that consumers who use these apps may be putting their privacy at risk.

The publication found that all of the apps it analyzed collect “a significant amount of private information” from consumers and may share data outside of the parties mentioned in the apps’ privacy policies. According to CR:

“This extensive data collection may not have immediate benefits for consumers, and could potentially pose a privacy risk, particularly in light of the many data breaches at credit bureaus and data brokers over the years.”

Consumer Reports asks app providers to improve what they offer consumers. The publication also wants Congress to pass legislation ensuring the right of all Americans to free and unlimited access to credit reports and their scores.

However, you do not have to wait for Congress to act before accessing your FICO score for free. For more details, check out “7 Ways to Get Your FICO Credit Score for Free.”

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