Another Major Bank Is Offering Free Credit Scores

Citi is the latest financial institution to give customers free credit scores through the FICO Open Access program, FICO announced, making it the largest participant in the program that will be available to more than 60 million consumers in 2015.

Citi hasn’t yet released details on its participation, but in general, an issuer periodically provides a cardholder the FICO score used to evaluate his or her account. It’s up to the issuer how often cardholders receive score updates — some provide it quarterly, others include it on monthly statements. However Citi chooses to present this information, it’ll be a helpful tool for consumers.

How Free Credit Scores Work

There are a lot of free credit score offerings out there, and many can be useful, but there are a few things consumers need to know when looking up their credit scores. Some scores are educational — meaning creditors do not use those formulas for making lending decisions — but they can still inform you whether you have good or bad credit.

There are tools like FICO Open Access and the free credit scores on Credit.com that show scores used by lenders, though you won’t know which formula a potential creditor will use when evaluating your loan application. Still, tracking the same scoring formula over time will highlight how your actions affect your score, even if you don’t know exactly what your score will be when a lender requests it.

You should also know checking these free scores won’t hurt your credit, so there’s no reason to not take advantage of them.

Why You Should Check Your Credit Scores

It can take a while to improve your credit score, so even if you’re not planning on applying for credit in the near future, it’s a good idea to work on your finances now, in anticipation of future credit needs. A better credit score can save you thousands of dollars over the life of your loan — the Lifetime Cost of Debt Calculator can show you just how much your credit score can save you. When you’re aware of your credit standing, you’re more likely to make day-to-day decisions that will help your credit — it’s a good example of the theory “you can’t improve what you don’t measure.”

Regularly reviewing your credit score will also help you spot fraud, because a sudden drop in your score is a sign of unauthorized use of your credit cards or Social Security number. Here’s a good rule of thumb: If your score changes more than 25 points in a month, you should figure out why. It may be as simple as you spent a lot more on your credit cards than usual since the last time you saw your score, but if you can’t explain the change with your own actions, you need to take a closer look at your credit card statements and credit reports.