Consumers win free credit scores

Good but not great

Still, consumer advocates say the usefulness of such services is mixed at best. Already, consumers can get one free credit report from each of the three main bureaus -- TransUnion, Experian and Equifax -- every 12 months.

Credit scores are not offered for free, so access to free scores is useful in that it can help consumers understand how specific financial decisions they make affect their scores. For instance, a consumer could see how closing an old credit account affects the score.

"People will have a sense of how their credit score is changing based on their behavior," said Joe Ridout, a spokesman with Consumer Action, a nonprofit consumer advocacy and education group in San Francisco.

But the problem with the services offered under this settlement, he said, "is it's not your true FICO score. It's a proprietary score offered by TransUnion, which is much less valuable" because more lenders focus on FICO scores than the credit bureaus' proprietary scores.

Also, TransUnion's proprietary score uses a different scale than the FICO, Ridout said.

Consumers "risk getting an unrealistic idea of how high their credit score is," he said, noting that a TransUnion score is often 100 points higher than a FICO score.

Ryan, the TransUnion spokeswoman, disagreed. "Any generic risk score is intended to tell you how you rate and give you an indication of your creditworthiness compared to the rest of the population," Ryan said. "Many lenders use TransUnion scores today."

Meanwhile, other consumer advocates say a credit monitoring service that covers only one credit bureau's information is not the best strategy.

A free service can't hurt, but don't pay for limited access, said Paul Stephens, the director of policy and advocacy at the Privacy Rights Clearinghouse in San Diego.

"If you're only receiving protection at TransUnion and not at the other two agencies, you have a two-thirds chance that the fraudulent activity will not get picked up," Stephens said. "It's very important that any credit monitoring service includes all three agencies."

Eligible consumers will be able to choose their free service as of June 16 by going to ListClassAction.com or calling 1-866-416-3470.

This article was reported and written by Andrea Coombes for MarketWatch.

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