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posted on 10 October 2015

Can Credit Cards With Access To Complimentary Credit Score Information Benefit Consumers And Lenders?

from the Philadelphia Fed

-- this post authored by Vyacheslav Mikhed

On November 19, 2014, Paul Wilmore, managing director for consumer markets at Barclaycard U.S., led a Payment Cards Center workshop in which he discussed his bank's experience providing a new option for credit card holders: free and frequent access to their FICO Credit Scores. This program fits well with a regulatory focus on increasing the transparency of credit information to consumers and fostering a better understanding and usage of their credit products.

Policymakers are especially interested in learning about the value of sharing credit score information with credit card holders and how this new information might affect consumers' credit behavior over time.

Despite the widespread use of credit scores and credit reports in lending decisions and their influence on credit terms, a majority of adults in the U.S. do not regularly review either their scores or their reports. In 2014, only 40 percent of adults reported reviewing their credit scores and 35 percent reported checking their credit reports in the past 12 months.

Recently, a number of U.S. lenders have begun providing complimentary credit score information to their credit card customers. Some lenders partnered with Fair Isaac Corporation to offer FICO Scores at no cost to consumers through the FICO Score Open Access program for this purpose. This program provides cardholders complimentary access to these scores purchased by the lender for ongoing credit card account risk management.

The FICO Score Open Access program was launched in November 2013. According to FICO, 60 million consumers were expected to be enrolled in the program through their credit card issuers by early 2015. The program was praised by President Barack Obama as a way to promote financial health and education for U.S. consumers and as a mechanism for consumers to spot identity theft and fraud. Richard Cordray, director of the Consumer Financial Protection Bureau (CFPB), urged lenders to join the initiative. In October 2013, Barclaycard U.S. was one of the first lenders to offer this service to many of its credit card customers.

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