Buzz
Credit score apps are widely used to track scores, but they aren't as effective as they seem. A recent analysis from Consumer Reports revealed that these apps use scores that aren't the same as those used by lenders, gather too much personal data, and often push unnecessary credit-monitoring services that you can get for free elsewhere.
What you need to understand about popular credit score apps
Consumer Reports analyzed five well-known apps—Credit Karma, Credit Sesame, Experian Credit Report, myFICO, and TransUnion: Score & Report—and found that:
Four out of five apps provide credit scores that do not align with those used by lenders to assess a consumer’s creditworthiness (Credit Karma, Credit Sesame, Experian Credit Report, and TransUnion: Score & Report).
Four of the five apps charge users for access to their credit reports—data that consumers are legally entitled to access for free (Credit Sesame, Experian Credit Report, myFICO, and TransUnion: Score & Report).
All five apps seem to gather more personal information than necessary to carry out their primary functions, and they appear to share data with third parties beyond those listed in their privacy policies.
How credit scores offered by apps differ from those used by lenders
The free versions of these credit score apps typically provide only one credit score, even though many versions exist. For example, three of the apps analyzed by Consumer Reports use VantageScore, rather than FICO scores, which are used in 90% of all lending decisions. MyFICO offers a range of FICO scores, but you need to pay $20 per month to access them. Experian Credit Report provides the widely-used FICO 8 score for free, though accessing other FICO scores requires a $20 monthly fee.
This information can often be of limited use. Sure, you could pay to track down some of the many credit scores available, but it won’t necessarily reveal the one a lender is actually using to assess your creditworthiness. (There are numerous FICO scores used for different purposes, like for mortgages or car loans.)
If you’re concerned about your credit score dropping, it might be easier to focus on maintaining good credit habits while monitoring your credit reports from the major bureaus—Equifax, TransUnion, and Experian—since these scores are based on them. After all, a credit score only gives you a number, not an explanation for why your score has changed.
Even the free versions of these apps come with drawbacks
Using the free version of these apps still requires giving these companies permission to gather your personal data, including information from external sources. Consumer Reports notes that this allows these companies to create a profile about where you live, work, socialize, and shop. For example, Credit Karma collects data from ‘local business reviews or social media posts,’ and MyFICO’s terms allow them to access ‘census data or real estate records.’
On top of that, these apps often try to upsell you on paid subscriptions or other financial products that Consumer Reports describes as ‘not necessarily in the users’ best interests,’ like credit reports you can already access for free.
Where to obtain your credit scores and reports for free
Many banks or credit card providers offer free FICO scores through their websites or apps. You’re also entitled to one free annual credit report from each of the major credit bureaus, available here. (During the pandemic, this rule was relaxed: You can now access a report from each bureau every week for free, until April 2022.) Otherwise, maintaining good credit habits is the best way to safeguard your credit score. For more on this, check out this Mytour post.
