What are the risks of using credit score apps?

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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 might not be all they are meant to be.

Popular credit scoring apps can come with additional costs and risks that you might not be aware of, new Consumer Reports research finds.

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

“No one should have to pay extra and hand over their personal data to private companies just to access their own credit information. Congress should give Americans unrestricted access to their credit reports and reliable credit scores at no cost so that they have an accurate picture of their creditworthiness without incurring additional charges.

CR has launched a petition urging lawmakers to pass these reforms.

Americans can only access their credit scores under limited circumstances right now, and many people CR spoke to said they like having 24/7 access to their credit information. in order to be able to track them and detect any unauthorized use of their accounts.

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

Consumer Reports reviewed 5 popular apps:

  • Credit Karma
  • Sesame Credit
  • Experian Credit Report
  • MyFICO
  • TransUnion: rate and report

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  • None of the apps provide users with free access to the credit scores used by most lenders assess the creditworthiness of consumers. MyFICO and Experian Credit Report charge users for access to “industry” credit scores that lenders typically use in making lending decisions. MyFICO charges $ 19.95 per month and Experian charges $ 19.99 per month or more than $ 200 per year.
  • Four of five apps charge 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 doing 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 in order to market products or services to users. This extensive collection of data may not have immediate benefits for consumers and could pose a risk to privacy, especially in light of the numerous data breaches at credit bureaus and data brokers over the years. .
  • Four in five promote financial products that may not be in the best interests of users: Credit Karma, Credit Sesame, Experian Credit Report and TransUnion: Score & Report. These apps regularly promote other financial products and services as personalized “tips” or “recommendations” to increase credit scores or save money, but reveal in the 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 make the most of the offers that are listed the most prominent.
  • All five services require users to agree to binding arbitration clauses that limit their ability to sue companies in court for damages.

CR also gave some tips to users:

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

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