Folks who bank with Commerce Bank now have an easy way to keep tabs on their credit ratings. FICO, a leading provider of credit scores, has partnered with the bank to offer free FICO scores to customers on their monthly statements.
Whether they access their statements online or elect to receive paper copies in the mail, people will be able to see how their FICO scores change each month. FICO scores range from 300 to 850 and can fluctuate from month to month. Scores are based on the information provided by lenders to credit reporting agencies about consumers’ payment activity. A score in the 700s and above indicates that someone is a good risk for a potential lender. Scores in the 600s and below are considered subprime and may mean lenders are more reluctant to extend a line of credit, or may charge a higher interest rate for a mortgage or other type of loan.
Maintaining a good credit score is an important part of staying financially healthy, along with things like putting money into savings and sticking to a household budget. The FICO Score Open Access program provides free credit scores to customers of various banks and credit cards, including Discover, Citi, and Chase Slate. Chad Doza, senior vice president of consumer credit cards at Commerce Bank, said, “Managing credit is something that our customers take very seriously, and Commerce Bank is excited to assist their efforts by providing free access to FICO Score information on their monthly credit card statements.”
Credit scores used for many purposes
Besides being a deciding factor when a customer applies for a loan, credit scores can also be used to determine whether or not an applicant gets a job, an apartment, a credit card or a mortgage. While having a poor credit score doesn’t rule out someone being approved for these things, it can mean they will have to pay a steeper interest rate than someone with excellent credit.
Credit scores, including the FICO score, are based on five factors: payment history, debt-to-available-credit-ratio, length of credit history, types of credit issued, and amount of new credit applied for. The most important of these is payment history; it is weighted the most heavily when calculating a consumer’s score.
The major credit bureaus – TransUnion, Experian, and Equifax – collect the information that FICO uses to determine credit scores. It’s important that consumers order copies of their credit reports from each of these agencies at least once a year to check them for accuracy. An estimated 80% of credit reports contain a mistake of some kind. While mistakes may be minor, they can still affect a person’s score. All consumers are entitled to receive one free credit report per year from each credit bureau.