Credit Wise: A Consistent and Understandable Credit Scoring Model

Just a few years ago, getting your credit score was a great big hassle. At one time, you couldn’t get it at all. Then you had to pay for it. Finally, the government passed a law allowing you to access your credit report and score once a year. Now, through credit score providers like Credit Wise, you can access your score for free whenever you wish.

The Fintech industry has given us this ability, and it’s a good idea to use it. In today’s marketplace, credit scores matter more than ever before. Firms like CreditWise provide a free method for the public to not only see their scores but also to understand how scoring works and how to improve their credit. By signing up with CreditWise, you can be on the road to managing your credit for success.

What Is Credit Wise?

Credit Wise provides customers with their credit score and credit monitoring services for free. Anyone can join Credit Wise. Capital One owns Credit Wise, but being a Capital One customer isn’t required. In addition to scores and monitoring, Credit Wise serves as a digital credit coach. It provides tools that allow customers to plan credit moves with models that predict impacts on their score.

For example, if you are considering opening a credit card or closing an account, Credit Wise has tools that allow you to know whether your score will go up or down. Just a few years ago, people were limited to one free peek at their credit score per year. Services like Credit Wise allow you to view your credit score for free at any time. Credit Wise will recalculate your score up to once a week.

Members are provided with their TransUnion and VantageScore 3.0 credit scores. VantageScore 3.0 is an updated credit scoring system produced by TransUnion, which is one of the three major credit bureaus. All three bureaus took part in creating the VantageScore 3.0 and swear by its effectiveness. It serves as an alternative to FICO scores.

How Does the VantageScore 3.0 Differ from the Fico Score?

The three major consumer credit bureaus, Transunion, Experian and Equifax joined forces to develop VantageScore and introduced it in 2006 as a free alternative to FICO scores. They created the VantageScore model to offer a more consistent and understandable credit scoring model.

FICO scores, which are based on a model designed by the Fair Isaac Corporation, have drawn criticism for being inconsistent across the three credit bureaus. Before VantageScore, lenders often relied on the FICO score average between the three bureaus. For example, a person might have FICO scores of 660 with Experian, 680 with TransUnion and 690 with Equifax, yielding an average FICO score of 676. VantageScore uses information from all three bureaus to create one score, which eliminates the need for averaging.

VantageScore Solutions was created in 2006 to manage and update the VantageScore system. The company believes that its model provides better predictive models and more consistent scoring. Since it integrates all three bureaus, it eliminates the possibility of one FICO score being way above or below the other two and creating a misleading average.

VantageScore proponents note that the system scores millions of people with a limited credit history who were formerly invisible to the credit bureaus. They also extol the ease of understanding the score and better predictive analytics. A VantageScore 4.0 is in the making.

How Do You Sign Up for Credit Wise?

In 2016, Capital One announced that it was providing free scores to anyone who signed up for its new Credit Wise program. It had tremendous success with its Credit Advantage program, which began in 2014 and provided free scores to Capital One customers. The company wanted to make this service available to everyone. This would help people increase their scores and become less likely to have credit woes, which are things Capital One certainly wants everyone to avoid.

To get started, navigate to the Credit Wise website. You can also go to the Apple or Android app stores and download the free app. If you are already a Capital One customer, you can log in immediately using your Capital One login and password. Capital One customers are automatically registered. Others need to register by filling in their biographical information and providing their Social Security number.  The system must access your credit report, but this does not count as a credit inquiry or affect your score.

Product Specs

Credit Wise provides much more than your TransUnion Score and Credit Wise 3.0 scores. Users also receive alerts when their credit scores change. This feature is particularly useful to those who are working to build or rebuild their credit ratings. They can see immediately when an action such as opening an account raises their score. The notification feature is also great for people who are planning a major purchase soon. A small difference in mortgage rates equals big money. It helps to have a credit monitoring service to alert you to any changes.

At any time, Credit Wise customers can view their score summary. The score summary breaks down the factors influencing a credit score. Customers see each of the elements of their score with a rating. This makes it easy to see what aspects of their credit are good and what needs improvement. For example, a customer with a history of late payments can see how much those payments are affecting his or her score. Then, the customer can work to improve and can watch his or her credit score rise.

Credit Wise customers also benefit from the credit score history graph. This graph depicts the increases and decreases in a person's score according to time and events, much like a stock market chart. Then, users can see how their scores have evolved, which makes it easier to chart a course toward a higher score.

Many Credit Wise customers rave about the simulator. This customizable tool allows customers to model how financial decisions will affect their Transunion and CreditWise 3.0 scores. To use the simulator, customers choose a variable, such as using a portion of their available credit, and the simulator projects the impact on their current score. The simulator can be used to project score impacts in all areas of credit use, including:

Many customers report using the simulator to gauge how much of a down payment they might need on a home. They can use the simulator to determine their mortgage interest rate and how much of a home they can afford. It’s then easy to determine how much savings they will really need. The simulator provides a convenient way to plan, and many customers have fun running different scenarios.

Pricing

It's hard to argue with free. Anyone with a Social Security number who is over the age of 18 is eligible.

How It Compares

We picked a few similar products available on the market to see how they compare.

The Verdict

In today’s online world, accessing your credit score is as easy as checking your email. You can do it from your computer or your smartphone. If you are not using a credit score provider, Credit Wise is the way to go. Sign up takes just a few minutes. If you are a Capital One customer, you can sign in right now using your Capital One login credentials.

The service is totally free and you don’t have to be a Capital One customer. At no cost, you will receive not just your Transunion FICO score but also your VantageScore. Educational tools will make you an expert in credit scoring. Then, you can use the modeling tools to predict the impact your financial decisions have ​ on your credit score. Your score is also updated on a weekly basis. Because Credit Wise provides weekly updates, a scoring system that takes all three major credit bureaus into account, and a user-friendly credit simulator, we give it 5 stars.