Yesterday Sallie Mae officially announced that they would be providing free credit scores to all of their customers.
According to their executive vice president, “knowing your credit score is important, but understanding the factors that impact your score and how FICO Scores are calculated are also beneficial. Our partnership with FICO accomplishes all of these.”
Existing Sallie Mae private loan customers can now log into their account, and if they scroll over to the customer service tab, there is a link to the FICO credit score. At present, Navient, the company spun off from Sallie Mae, is not offering the same service.
A Good Thing
Here at the Student Loan Sherpa, we have been pretty critical of Sallie Mae in the past. In this case, their actions will likely benefit many borrowers.
Not only is knowing and understanding your credit score important, but monitoring it is of great benefit. Borrowers who see a sudden decline in credit score could potentially be alerted to instances of identity theft. The sooner identity theft is identified, the less damage is done. Free monthly access to FICO scores is a great resource in combating identity theft.
FICO not FAKO
Another aspect of this program that should be beneficial to borrowers is that they are being provided actual FICO scores. Many credit agencies have credit monitoring services that provide credit scores, but these scores, often referred to as FAKO scores, are not used in credit approval decisions.
While there are over 50 FICO scores available to lenders, giving student loan borrowers access to one of the FICO scores instead of the FAKO score is a great resource.
The Real Motive
After watching Sallie Mae practices for years, it is hard not to be a little bit skeptical about their motives behind the move.
This is especially true considering the fact that Sallie Mae has a great incentive to get people informed and motivated to keep their FICO score high. Do any credit score research, and you will quickly learn that late payments equal low scores. If Sallie Mae gets their customers chasing higher credit scores, they will be far more likely to stay caught up on their student debt.
The Bottom Line
Sallie Mae may have ulterior motives for offering free access to FICO scores, but this move is also a win for borrowers.