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New Bank Rules: Free Credit Scores with Loan Denials

Most of us don't know our credit scores, but beginning next week there will be a new, free way for some of us to learn. Starting July 21, if you are denied a private student loan, small business loan, mortgage or credit card -- or even given one but with a less favorable rate -- the lender must provide you with a letter explaining why, and include the credit score it used to arrive at its decision.
The Federal Reserve Board and Federal Trade Commission jointly decided to enact this law to help create more transparency in the lending market. But if you don't know your credit score ahead of applying for a loan, best not to wait for a rejection letter from the bank.

To stay in control, use one of these other ways to get your credit score:

Go to the Source
There are many web sites claiming you can get a "free credit score," with cool songs and jingles, but most of these offers only provide a free credit score if you sign up for a service first -- and that service is not free. Most of the time, in fact, these promotions offer a score that's not your FICO score -- the most popular score out there and the one used by about 90% of lenders in evaluating loan applications.

If you want to know your FICO score, head to It costs about $20 and offers access to your FICO score from one of the major credit reporting agencies (either Equifax or TransUnion -- your choice). You also get a report explaining the positive and negative factors behind score.

Ask Your Bank

Some banks -- particularly credit unions -- will give certain checking account holders access to their FICO scores on a regular basis. For example, at Digital Federal Credit Union (where I am a member), Checking PLUS members can receive their Equifax FICO Credit Score once a month for free.

Get an Estimate

If you're just curious and don't need to know your score at the moment, you can get free approximations at legitimate web sites like Credit Karma, Quizzle and (where, full disclosure, I am also a contributor). These web sites will ask you for information such as your birthday, your Social Security number and driver's license ID -- all to verify your identity. I've tested all of these sites and believe they are safe.

If you're still wary, though, FICO has a free mobile application called myFICO that gives you a rough score after asking you a series of questions about your credit card usage and habits -- none which require your Social Security number or any personally identifying information.

Farnoosh Torabi is a personal finance journalist and commentator. She is the author of the new book Psych Yourself Rich, Get the Mindset and Discipline You Need to Build Your Financial Life. Follow her at and on Twitter/farnoosh

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Photo courtesy: Casey Serin's photostream on Flickr

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