Citigroup Citibank Offers Free Credit Scores
Citigroup, the fourth-largest credit-card lender by purchase volume in the U.S., is partnering with Fair Isaac Co., the provider of the credit score most widely used by lenders, to provide its customers with their FICO Score beginning in January.
Consumers with Citi-branded credit cards will be able to see the FICO Score that Citi has for them — and that it uses to make lending decisions — on their online accounts.
Citi is the largest credit-card issuer so far to join a program that Fair Isaac, often called FICO, launched last year. Participating lenders agree to provide the exact FICO Score they have on their customers. Prior to this program, consumers weren’t able to view those scores, unless they were denied for a mortgage.
FICO says its credit score will be available on some 32 million credit accounts by the end of this year, up from eight million when the program started in November with Barclaycard, a unit of Barclay’s and First National Bank of Omaha, a unit of First National of Nebraska.
Since then, additional lenders that have signed on include Discover Financial Services, the largest private student-loan lender, better known as Sallie Mae; and Pentagon Federal Credit Union, the third-largest credit union.
The moves come as the federal government has been upping pressure on lenders to provide credit scores to their customers. The Consumer Financial Protection Bureau sent a letter to the largest credit-card issuers in February urging them to take this step. It has since been in discussion with several issuers to begin providing this service.
On Friday, President Barack Obama signed an executive order to help protect consumers’ financial security. In a speech at the CFPB, the President expressed his support for credit-score transparency.
For the most part, the score disclosed by Citi will only help borrowers to know where they stand with that lender. FICO Scores can vary by lender, in part because lenders may be pulling the FICO Score from a different credit-reporting firm. There are three main firms: Equifax, Experian and TransUnion.
Moreover, more than 45 types of FICO Scores are available to lenders, says John Ulzheimer, president of consumer education at CreditSesame.com, a credit management site, and a former manager at FICO. FICO has various scores that lenders can choose among based on their preferences and for different purposes. There are FICO Scores that assign more weight to how consumers manage their credit-card debt, others that focus more on car-loan debt and others on home-loan debt.
Lenders use FICO Scores in 90% of consumer- and mortgage-loan decisions, according to a study this year by CEB TowerGroup, a financial-services research firm.
Credit card issuers check the credit scores of their existing cardholders to determine whether to increase or decrease their credit line and whether to change their interest rate.
Customers who have continuous access to their credit score are likely to notice if they are victims of identity theft. For example, if fraudsters open accounts in their name, rack up debt and don’t pay it, the victims’ credit score will decline.
While people could check their credit report for such evidence, few do. Fewer than one in five Americans check their credit report in any given year, according to the CFPB.