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It wasn’t very long ago that if you wanted to see your FICO score you had to go to FICO’s website and pay $20. Nowadays, you can get free access to your FICO score anytime by just being an American Express (Amex) cardholder.
In 2015, American Express joined a growing group of credit card companies that offered the highly coveted credit score as a benefit to their cardholders. That is a huge plus for Amex cardholders, who tend to be more affluent, spending upwards of $20,000 a year on their cards and having average credit scores of 700+.
What Amex Cardholders Actually Get With Their Free Credit Score
For some time, Amex provided its cardholders with free access to their Experian Plus score, which is a quasi-FICO score used primarily for educational purposes, not as a credit score used by lenders. In 2015, AMEX started providing free access to FICO Score 8, which is based on data from Experian, one of the three major credit reporting agencies, and it is an actual FICO score used by lenders.
Through their online account, Amex users can look up their FICO score and compare it from one month to the next over a period of time and see how they rate based on FICO’s scale. They also have access to many of FICO’s educational tools and resources for helping them better understand and improve their credit scores.
Why Amex Started Offering a Free FICO Score
Amex wasn’t the first credit card company to offer access to actual FICO scores. They followed in the footsteps of Chase, Citi, Bank of America, and others that were offering them as early as 2014. The years from 2010 to 2015 marked a period of awakening for credit consumers, many of whom were victims of the financial crisis, which was triggered in part by shady banking and lending practices.
In response, and with some strong arming by federal regulators, the banking industry stepped up efforts to educate consumers on credit utilization. A part of that initiative included offering free access to FICO scores, which had previously only been available by purchase.
For Amex it was a matter of catching up to the rest of the pack, especially the leading credit card issuers. With most of the top rewards programs achieving parity with one another, offering a benefit such as a free FICO score became another differentiator. Today, especially among the top credit card companies, it has become an expectation. However, whereas many credit card companies offer some variation of the authentic FICO score, Amex is one of a handful that offers the real deal.
What Makes FICO so Important?
Discover was the first to offer a free FICO score in 2013 and now most major banks offer some version of a credit score, but not all offer actual FICO scores. Many lenders and credit card companies have created their own version of a FICO score, which are based on the FICO score model, but they can vary widely in how they score the various credit factors. The two most important scores used by most of the top lenders are FICO and VantageScore. FICO is used by 90 percent of the top lenders and VantageScore is used by 20 of the top 25 financial institutions in the country.
Each of the three national credit reporting agencies – Experian, Equifax, and TransUnion – produced a credit score based on your credit report. They each use their own model that is based on the FICO model but they apply their own algorithm to generate a score. Each model measures five key credit factors weighted by their importance in credit scoring:
- Payment history – 35 percent
- Credit utilization – 30 percent
- Length of credit history – 15 percent
- New credit – 10 percent
- Credit mix – 10 percent
Although they may use the same scoring model, each of the credit bureaus may apply a different weighting to the factors, and they may use different sets of data to compile your reports. So, the score you get from Equifax will be different from the one you receive from TransUnion. All of their scores will be different from FICO. If you want to see the credit score that most of the top lenders see when they review your credit, you want to see your FICO score.
Author: Jeff Gitlen
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