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Credit Scores Make No Sense

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I spend a lot of time talking about whether or not the free credit scores from CreditKarma, or the WalletHub free credit scores, or the credit scores from Credit Sesame are “real credit scores” or not. The reality is that most of the time, it doesn’t actually matter. If it’s a Tuesday afternoon and you are sitting on your porch with a cold one, it is irrelevant whether your credit score is 714 or 723 or 815. The only time it matters, is when you are actually getting a loan.

An interesting situation this weekend has shown me that even those real credit scores aren’t really real.

Real Credit Scores

When most people talk about a “real” credit score, they mean a FICO score. Most lenders rely upon FICO scores to make a decision about lending or what interest rate you get. The catch is that there are numerous kinds of FICO scores ranging from those used to judge creditworthiness for credit cards, a different one for car loans, and another still for mortgages. Beyond that, there are three major credit bureaus and all three of them can yield a different score depending upon what has been reported to each company. In other words, your real credit score can be many different numbers at any given time.

Here is where it gets really weird.

credit score real number — A credit score as real as the pot of gold at the end of the rainbow…

As a former financial planner, I still have people reach out to me from time to time about financial matters. Usually, I’ve seen it before, and I’m happy to help, but this time was a little different.

The person was applying for a certain kind of loan. For the purposes of this loan, you get the best possible terms with a credit score over 735. They pulled two different credit reports, and as I mentioned above they did have two different numbers. One was 736, and one was 733.

In this particular case, they go with the lower score, so just 2 points short of the best range.

As it turns out this person has a Citibank rewards credit card that they use to buy everything during the month. When the bill comes, it gets paid in full and they never pay any interest. So, the points get racked up, but no interest is paid. This is smart.

However, depending upon when Citibank reports the current balance to the credit reporting bureaus, the balance could be very low (just after being paid off), or very high (just before getting paid off). In this case, a balance of just over $5,000 had been reported. It was projected that if he had a balance below $300, then that would increase his score by 4 points.

Here is where this is ridiculous. This person has $30,000 in savings, and a non-retirement brokerage account nearing $200,000. Paying off the card is a trivial matter, which anyone could see by looking at both the history of the card (no late payments, no interest payments) and the cash available. But, that isn’t how credit reports work.

So, sure enough, he logged on to the website, paid the card to zero, and called back the lender who requested a printout of the screen showing the new low balance.

Result?

The 736 is now his low score, and he gets the best terms for his loan.

All because of this new REAL credit score.

Experian Free Review – Scam, Legit, Worth It?

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Did you see commercials for a free credit service from Experian. They do something clever in that they de-emphasize the free credit score idea and instead play up the concept that “credit is a skill” rather than a number. This is actually true advice, even if it isn’t what most people are looking for.

This new push is undoubtedly a response to the growing number of free credit score services out there like Credit Karma, Credit Sesame, and WalletHub. Keep in mind there is no Experian free credit score offering, but we’ll get to that in a minute. This is also not the same thing as getting your annual free credit report that is required by federal law.

Free Experian Credit Report Not Free Experian Credit Score

Is Experian a scam? There are plenty of unsavory things about Experian’s business, but at least they are not some new free credit report, or free credit score business. Experian is one of the three major credit bureaus, and they have been around for a long time. If you have ever had a credit card, mortgage, car loan, or personal loan, chances are, they already have a report on you with all of your information. Which means, unlike some of the other newer free credit report businesses, you don’t have to worry about giving them your data, they already have it.

The credit bureaus lobbied Congress hard to keep people from being able to get their credit reports for free. They lost that fight (sort-of) several years ago when Congress required them to give you ONE free credit report every year. While this is better than nothing, credit fraud, and inaccurate information on credit reports is an epidemic in America, and the only defense is to monitor your credit report regularly, so that once per year thing doesn’t really cut it. Since, many lenders report your information to all three credit bureaus, you can work the system to get a free credit report more than once a year by staggering your requests for your free annual credit report to every four months.

However, in the last few years, many financial companies have begun offering a free look at your credit report as a way to market their services. Some of these offers are pretty legit, others are scams that actually sign you up for expensive credit monitoring subscriptions. So, at risk of becoming ignored, it looks like Experian is going to play ball.

It is important to be careful about what you sign up for. Experian is a scam when it comes to signing up for a free credit score. (That’s SCORE not REPORT, there is a difference.)

Actually, you can get an Experian credit score for $1… until you read the fine print. The reason they charge you that one dollar, instead of giving you a free credit score, is so that they can get your credit card number. And, they’ll use that credit card number to charge you $21.95 PER MONTH for a membership in something called Experian CreditWorks, which is essentially nothing more than an email alert if there is a change on your credit report. The annual cost is $263.40 for that! So, CreditWorks is a scam, no matter how much “credit is a skill.”

That being said, you can sign up for a free monthly credit report from Experian. The Experian free monthly credit report is not a scam. You don’t even need a credit card number to sign up.

This is IMPORTANT! Do NOT sign up for anything that requires a credit card number. If you do, you are signing up for the wrong thing, and YOU WILL BE CHARGED.

The free credit report from Experian is much the same as you’ll get from other companies, or even from your existing bank accounts or credit card companies. It’s basically a list of information about you, including all the credit accounts you have open, and even the ones that you have closed, along with a payment history.

This is a valuable tool to use to improve your credit score, even if you don’t have the actual credit score number. Most the free credit score services actually give you a fake, or FAKKO, credit score anyway. What IS important is the information on your credit report is what is used to calculate your real credit score.

The most critical thing is to make sure that everything on your credit report is accurate. If you see accounts that you don’t recognize, call them. Often, it’s an old account that you forgot all about. There is no reason to close them if they have a zero balance. It still counts as a paid, existing, line of credit, which is a plus for you.

If there is anything that shows up as negative, correct it as soon as possible. Everything on your credit score ages, so the sooner you correct any issues, the faster negative information gets taken off your credit report. It takes years to fully disappear, but a missed payment five years ago, counts less than a missed payment five months ago.

Be sure to only sign up for the FREE service (it won’t ask for a credit card number) and use it to keep an eye on your credit report. If everything is correct, and you’re making all of your payments on time, your credit score will take care of yourself, even if you don’t know exactly what it is.

Barclaycard Rewards MasterCard Review

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The folks at Barclay Card are nothing if not persistent. A buddy of mine is overseas. I picked up his mail, and there are at least a dozen Barclaycard MasterCard mailers in here. It got me wondering, is the Barclaycard Rewards MasterCard good or is the Barclaycard MasterCard a waste of money? Without further ado, here is the Barclaycard Rewards MasterCard review.

Barclaycard Rewards MasterCard Reviews

The Barclayscard MasterCard rewards card is issued by Barclays Bank Delaware. Barclays Bank Deleware was originally Juniper Bank, but was bought by big British bank Barclays in 2004. There is no actual bank, it only issues credit cards in the U.S. In addition to the Barclaycard Rewards MasterCard, the bank issues co-branded cards, such as an American Airlines credit card, the JetBlue credit card, and a Priceline.com rewards card.

As always, different customers can get different terms and conditions for the same cards, but in this case, it looks the Barclaycard Rewards MasterCard is setup as a points rewards credit card.

For every $1 you spend on gas, utility, and grocery stores, you earn 2 point. Note, that Target and Walmart are specifically excluded as grocery stores for the purposes of 2x points.

Then, you earn one point for each dollar spent everywhere else.

Barclaycard Rewards MasterCard Redeem Points

Without a Barclaycard Rewards MasterCard catalog, it’s difficult to tell just how worthwhile the points are when it comes time to actually redeem Barclaycard rewards points. However, even though I don’t actually have the Barclaycard Rewards Catalog, the mailing does state that you can redeem the points for statement credits, deposits to checking and savings accounts, and gift cards. The starting rate for Barclays Card rewards point redemptions is 1,000 for $10.

That’s a pretty standard point redeem schedule for most cards. For example both Capital One card rewards, and Citibank rewards use similar pricing tiers. So, based on the 2x points earned, that would make the Barclaycard MasterCard a good deal, but based on the 1x points, that would make it average.

The amount of points you can earn is not limited, which is a good thing. A recent sneaky trick of fine print for some credit card scams is to limit the amount of points you can earn each quarter, or each year, particularly from higher earning categories.

As an added sweetener, it offers “free online access to your FICO credit score.” The fine print does not say which FICO score it shows, nor how often your credit score is updated.

For non-FICO scores, there are plenty of free ways to get a free VantageScore from companies like Credit Karma, WalletHub, or Credit Sesame.

Barclaycard Rewards MasterCard Reviews Terms and Conditions

Since the Barclayscard points are an average offer, a good review of Barclaycard Rewards card comes down to the terms and conditions.

There is no annual fee for the Barclaycard card, so that’s a point in it its favor.

There is an introductory interest rate of 0% for 12 months, but after that, the interest rate is crazy high though. The current rate shows 23.24%, but that’s based on a 3.5 percent Prime Rate. The rate is variable, and is calculated at Prime plus 19.74%. The cash advance rate is even higher calculated at Prime + 21.99%.

Balance transfers are eligible for the 0% rate for 12 months, but there is an upfront balance transfer fee of 3 percent, so you aren’t getting off that easy.

Foreign transactions have a 3% transaction fee, so this card is right out for international use.

BarclayCard Deal or No Deal

My understanding is that Barclaycard is primarily marketed to those with lower credit scores, so that might explain the very high interest rates. Obviously, if you are going to carry a balance, the Barclaycard Rewards MasterCard is not a good card for you.

If, on the other hand, you have some damaged credit, and you won’t be carrying a balance, a no annual fee card with 2x points for grocery stores and gas might make the Barclaycard a good card for you.

Overall, for my Barclaycard Rewards Mastercard review, I’d have to give the Barclaycard Rewards MasterCard an average, or 3-star review.

WalletHub Review Is It Legit or Scam Free Credit Reports

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WalletHub reviews are mostly positive, but let’s take a deeper look into exactly who WalletHub is, and what they do.

WalletHub is an online financial service that offers personal finance tools for users. The main offering is a daily free credit score, and the related free credit report. After taking a close look, here is my WalletHub review.

Is WalletHub Legit, or is WalletHub a scam?

In order for a company to pull and use your credit report, and then calculate a credit score, it will need to collect personal identifying information. This is exactly the kind of information you don’t want to be handing off to a scammer, so the first item of business with a company like this is determining if Wallet Hub is legitimate or not. So, the first step of any WalletHub review needs to be finding out who they are.

WalletHub is an offering by a company called Evolution Finance. The company was founded in 2008, according to Bloomberg, and has been mentioned numerous times in the media. The original product was a credit card comparison website called CardHub. You can still get there if you try, but most clicks on CardHub.com will end up redirecting you to WalletHub, suggesting that WalletHub is the company’s main product going forward.

In other words, if WalletHub is a scam, it’s a very long con, across two websites. In this case, we can probably proceed under the assumption that WalletHub is legit as a company.

Just because it is a real company, however, doesn’t mean that it isn’t a scam. There are plenty of companies out there whose entire business model relies on playing just inside the legal boundaries. The most common free credit score scam, or free credit report scam, is the subscription to something in order to get the “free” stuff. For example, this Credit Check Total review shows how they offer three credit reports and credit scores for just $1, but in the fine print, you are actually enrolling in a 7-day trial that automatically becomes a recurring $29.95 per month subscription.

The good news is that WalletHub does not ask for a credit card. There is no subscription, and no ongoing fee. The service really is free to you. So far, this WalletHub review is going pretty well.

How Does WalletHub Really Work?

Now that we know WalletHub isn’t just an elaborate ruse to steal our Social Security number, it’s time to find out what is really going on.

The big splashy graphics say that you get a credit report daily, along with 24/7 credit monitoring, and, of course, a free credit score. So, how does Wallet Hub really work?

Sign up requires your first and last name, as well as an email address. At the email address stage, clicking “Continue” also agrees you to the terms and conditions for the site. (We’ll get to that in a minute.) Next you setup a password, and then it asks for your address. I hate giving out my address, but they may need it to verify your identity for a credit report.

Next up, is a potential deal-breaker for some. It wants you cell phone number in order to “send important credit alerts and improve account security.” I don’t like the sound of this, but that is up to you. Other free credit score services like Credit Karma don’t require a cell phone number.

Once you are signed up, you do get a free credit report. The credit report itself comes from TransUnion. As you may know, there are three major credit reporting bureaus, and TransUnion is one of the, so the credit report is real enough.

Check out my Acorns review here.

Of course, WalletHub has to make money somehow, and that somehow, is that they sell your information to lenders, as well as advertises offers to you that they would get some sort of kickback or commission on if you signed up. This is the relevant part of the Terms and Conditions.

4.5.1. I understand that I am providing written instructions in accordance with the Fair Credit Reporting Act (FCRA) and other applicable law for Evolution Finance to obtain and exchange information about me with third parties at any time for so long as I have an active WalletHub account. This includes but is not limited to a copy of my consumer credit report and score from consumer reporting agencies as well as exchanging credit data with lenders to identify offers that you may be prequalified for. You also agree that Evolution Finance may use and analyze your information, including but not limited to: (a) providing you a better experience; (b) providing you with customized recommendations and general information about you; (c) serving you targeted offers and other communication based on your information; (d) running statistical analysis; and (e) aggregating your data with other users data and publishing the results in a way that cannot be linked back to you.

So, basically, they can (and will) tell credit card companies, or other lenders about you and your creditworthiness. Those lenders may then send you mail, email, or maybe even call you, with offers for loans or credit cards.

Is WalletHub Credit Score Real?

The main credit score used by virtually all lenders is a FICO credit score calculated by a company called Fair Issacs. For most people, a FICO is what they mean when they are talking about a real credit score. However, there are others. They are just less commonly used by lenders.

One of the “other credit scores” is called a VantageScore, which is a credit score product jointly created by the three credit bureaus. These scores are often derisively referred to as FAKO scores in the personal finance community because they aren’t used often by lenders. In other words, the credit score you get from WalletHub is unlikely to exactly match the score your lender would pull when deciding whether or not to give you a loan. (See here for more information on credit score differences.)

Here is my recent Digits review.

This does not make WalletHub a scam. In fact, these VantageScores are now offered by numerous financial institutions, as well as online personal finance offerings. For example, Capital One rewards cards offer a credit score screen that shows a VantageScore 3.0.

The important thing to understand is that these credit scores are great for monitoring changes in your score, even if they aren’t necessarily a good way to see what your actual score is. If you sign up for WalletHub, remember that if your score goes up or down, that is likely very real, and will happen on your FICO score as well. However, if you are banking on a 720 score to get a certain loan or rate, showing a 720 at WalletHub may, or may not, correlate with a 720 when your lender pulls a specific FICO score.

WalletHub Recommendation

If this is the first time you’ve heard of an online company offering free credit scores, this may all be new to you. Otherwise, this WalletHub review probably sounds pretty familiar. There are several companies that use this, free credit report, free VantageScore credit score, offer in exchange for getting commissions or selling mailing lists to lenders.

Most of these services offer the same things like credit monitoring (you’ll get an email if the computer notices a change to your credit report), which is very useful.

WalletHub says it offers “daily” updates, whereas other services offer weekly, or monthly updates. However, creditors don’t update daily, so I’m not completely sure how much of an advantage that is over time. I suppose if you are making a change, and want to see the effect as soon as possible, it may be useful. There are also some useful financial tools and a user community.

In the end, my recommendation is that you find one of these free credit report, free credit monitoring sites, that you like and sign up. That way, you get a way to occasionally look at your credit report beyond the one free credit report per year thing, and you get an email if someone starts opening credit cards in your name. However, I wouldn’t bother signing up for more than one service. They tend to all offer essentially the same services, and signing up for multiple sites just puts your financial information in more places to be hacked, lost, or stolen.

Whether you choose WalletHub, or another service, is mostly a matter of personal preference.

WalletHub Reviews Disclosure

While I’m ready and willing to sell out at anytime for a trip to Vegas or some cool electronic gadgets, I did not receive any compensation, nor any offers of compensation, in exchange for this review. None of the links are affiliate links, and I have no financial or other relationship of any kind with WalletHub. I do not get paid in any way if you sign up for WalletHub. Any ads displayed on this article, or anywhere else on this website were generated automatically by Google’s AdSense program, and are not endorsed or chosen by the author. All information was gathered from publicly available sources.