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Why do I have to pay to get my credit score?

By , CardRatings contributor
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Federal law guarantees that you can visit AnnualCreditReport.com and get free credit reports from each of the three major credit reporting agencies every year. Here's a handy trick I learned from radio host Clark Howard that will save you money. Mark a calendar for three dates, four months apart. Visit the website, and request just one of your reports. Request each of the other two on the other target dates. That way, you can check for credit reporting errors throughout the year without paying for a credit monitoring service.

However, you've probably noticed that your free credit report doesn't come with a credit score. It's hard enough to wade through lines and lines of confusing entries, but it's even tougher to understand what a potential lender might do with that information. A credit score helps lenders and consumers put financial data into context. Framing up your status as a letter grade or as a three digit number shortens the conversation about your financial health.

Why credit reports aren't free

Credit score algorithms crunch through your financial history to arrive at your final score, but your score isn't itself a "fact" that's part of your credit report. In fact, running your data through competing scoring systems can actually produce different results. You may notice this if you're on one of the bubbles between consumer categories: VantageScore may call you a "good" consumer, while FICO may suggest your credit's "fair." Credit scoring agencies own the rights to those algorithms, which is why they charge you (and banks) for the service.

How to find free credit scores

Fortunately, you don't always have to pay for your credit score. Some credit card companies now include access to certain scoring systems as part of their member benefits. Alternatively, under recent changes to federal banking laws, a lender who denies your request for credit based primarily on your credit score must disclose that score to you.

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