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Should You Sign Up for Discover's Free FICO Score Tool?

Jun 07, 2016

No person can be reduced to a single number -- but as far as lending institutions are concerned, your credit score pretty much sums you up.

Banks use the number to determine your creditworthiness -- the higher the score, the less you have to dole out in loan costs. Borrowing to buy a mortgage or car? Improving your standing from fair (around 650) to excellent (around 740) can save you tens (if not hundreds) of thousands of dollars over your lifetime, according to Credit.com.

Yet almost 60% of Americans don't know their score, according to a 2015 Lending Tree survey, including three-quarters of those aged 18 to 24. Only one-sixth of respondents could correctly identify a perfect score. (It's 850, in case you're in the majority.)

Discover has been offering its cardholders a free FICO score (provided by TransUnion) in their monthly statements since 2013. Other issuers, like Chase and American Express, have also been offering free FICO scores to customers in recent years.

Now a new online tool, the Discover Credit Scorecard, aims to put you in touch with your critical digits -- letting you access one of your three FICO scores at all times, for free, and see what factors are hurting and helping your creditworthiness -- without requiring you to sign up for a Discover credit card. Registered users of the site can see the length of their credit history, how much of their available credit they're using, and their number of missed payments, among other score factors.

But should you sign up? And how is this different from other free credit score offerings, like Credit Karma? Here's what you need to know.

Pros

The Consumer Financial Protection Bureau has generally supported credit cards' delivery of FICO scores, and other credit experts praise the new tool for expanding access. "I think Scorecard is great for consumers," says ValuePenguin.com's Robert Harrow. "If people are aware of their credit score, they can take proactive steps to improve it."

The Discover tool clearly shows what's negatively impacting your score, allowing you to take corrective action. If you see something on the Credit Scorecard that looks suspicious, you can order a free credit report from annualcreditreport.com -- you're entitled to one for free from each of the three credit bureaus each year -- and request a fix from the bureaus.

And it's worth noting that while the Credit Scorecard offers access to FICO scores (from Experian), competing websites like CreditKarma and CreditSesame surface only the VantageScore, a FICO alternative that's less widely used.

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Cons

But is there a catch? "There's really no material downside," says CreditCardForum's Ben Woolsey.

Still, there are a couple of caveats. For one thing, to use the tool and get access to your score, you will have to submit some personal data -- including your Social Security number and address.

Also, bear in mind that this is just one score -- if you're planning to borrow for a house or car in the near future, you may want to see all three of your scores. (You can buy the TransUnion and Equifax scores from myFico.com for $20 apiece.)

Verdict

If you've got a big purchase ahead and don't already get a FICO score from your credit card issuer, it's worth signing up for the Discover tool. It will let you comb through your profile and adjust your behavior, if needed, to raise your score. (One relatively easy step is to use less than 30% of your available credit limit.)

Remember, however, that your credit score is just a means to an end. "It doesn't matter much whether your score is 750 or 780 from a lender's perspective," says Harrow. "Odds are you're qualifying for the best rates at that point. My worry is that with these types of services, people begin to chase something they don't need."

So monitor your credit score, and reports, to make sure lenders see your best self. But don't strive to earn an 850 just for perfection's sake.

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