Credit score

What are the risks of using credit score apps?

Consumer Reports cited unreliable scores, unnecessary fees, privacy risks, and questionable promotions.

NEW YORK — Many people turn to apps to check their credit score without affecting it, but they may not be all they’re made out to be.

A new study by consumer reports finds that popular credit score apps may come with additional costs and risks that you may not be aware of.

“Most of the apps we reviewed offer credit scores not typically used by lenders and have other downsides, such as unnecessary costs and privacy risks,” said analyst Syed Ejaz. financial policies for Consumer Reports.

“No one should have to pay extra and trade their personal data with private companies just to access their own credit information. Congress should give Americans unrestricted access to their credit reports and reliable credit scores, free of charge, so that they have an accurate picture of their creditworthiness without incurring additional costs.

CR launched a petition urging lawmakers to enact these reforms.

Currently, Americans can only access their credit scores in limited circumstances, and many people CR spoke to said they liked having 24/7 access. 7, to their credit information so that we can track them and detect unauthorized use of accounts.

However, some users have raised concerns about the accuracy of their scores, the annoyance of ads, and the risk of their information being sold to other companies or stolen by hackers.

Consumer Reports reviewed 5 popular apps:

  • credit karma
  • Sesame Credit
  • Experian Credit Report
  • MyFICO
  • TransUnion: note and report

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  • None of the apps provide users with free access to credit scores that most lenders use. to assess consumer creditworthiness. MyFICO and Experian Credit Report charge users for access to “industry” credit scores that lenders typically use to make lending decisions. MyFICO charges $19.95 per month and Experian charges $19.99 per month or over $200 per year.
  • Four of five paid apps for credit reports that consumers are entitled to access for free once a year on annualcreditreport.com: Credit Karma, Credit Sesame, Experian Credit Report and TransUnion: Score & Report. Since the start of the COVID-19 pandemic, major credit reporting agencies have provided free weekly access to credit reports through this website and plan to continue to do so until April 20, 2022.
  • All five collect a substantial amount of private information from users and appear to share data beyond the parties named in their privacy policies. Companies use this data to develop detailed user profiles to market products or services to users. This extensive data collection may not have immediate benefits for consumers and could pose a privacy risk, especially in light of numerous data breaches at credit bureaus and data brokers over the years. .
  • Four of the five promote financial products that may not be in the interest of users: Credit Karma, Credit Sesame, Experian Credit Report and TransUnion: score and report. These apps routinely promote other financial products and services as personalized “tips” or “recommendations” for boosting credit scores or saving money, but reveal in fine print that the services are not necessarily in the interest of users. App providers make money when users sign up for promoted financial services and can make the most of the most prominent offers.
  • All five services require users to agree to binding arbitration clauses that limit their ability to sue companies in court for harm.

CR also gave some advice to users:

  • Consider checking credit reports regularly and free of charge through annualcreditreport.com and dispute any errors that may appear.
  • Many banks and credit cards offer free access to credit scores to their customers.
  • Be aware of the costs and limitations associated with credit score applications.