Active-duty service members and their families have a new financial tool in their arsenal: free FICO credit scores.
The FINRA Investor Education Foundation is making the widely used credit score and other financial tools from myFICO.com available for free as part of its military outreach program. The usual price for this FICO standard service is $19.95.
Scores play a big role in the credit decisions of banks and others, making this three-digit number critical to service members and civilians alike. A new federal regulation taking effect this summer requires lenders and others to make scores available for free — but only if consumers are denied credit or receive less favorable terms because of their number.
The advantage of the foundation giveaway is that active-duty service members and their families can get their free score before applying for credit. That gives them time, if necessary, to correct problems or make changes to improve a score before approaching a creditor.
The Investor Education Foundation, created by industry securities regulator FINRA, started focusing on military issues after an enforcement action several years ago against an investment company for misleading service members. The company was ordered to pay $12 million, and $6.8 million of that was used to launch the foundation's financial education program for the military.
John Gannon, president of the foundation, says his organization aims to ensure that the military community has access to loans and other credit at favorable rates. And one way to do that is to work with service members and their families so they understand credit scores and how to improve them, he says.
Even if service members aren't applying for credit, knowing a score can be useful, says Fred Eisenbrandt, finance corps commander with the Maryland Defense Force, which supports the Maryland National Guard.
"If you have a bad score and don't know why," he says, "you can go and try to solve the problem."
Eisenbrandt says he told National Guard members about the free FICO score this past weekend during an event to prepare them for deployment to the Middle East.
Among the best ways to improve a score is to pay bills on time. But simple things such as checking a credit report and correcting errors can help, too. A score is based on information in credit reports.
Ryan Yarnell, a financial counselor at Fort Meade in Anne Arundel County, says one of the issues he deals with is helping clean up credit reports of service members who move frequently.
Sometimes service members don't realize after a transfer that their former utility is still sending notices to an old apartment, Yarnell says. The unpaid bills appear on credit reports and ultimately ding a credit score.
Figures on whether service members have better or worse scores than civilians aren't available. But military service members are more likely to check their scores, likely because scores play a part in security clearances.
An Investor Education Foundation study released last fall found that 67 percent of service members had viewed their credit score in the past year, compared with 39 percent of civilians.
And now, checking the scores just got cheaper.
To get a free FICO score, active-duty members and their families must go through the personal financial manager on their military installation. To find personal financial management services on installations online, go to http://www.militaryinstallations.dod.mil/ .