This past Wednesday, JPMorgan Chase (NYSE:JPM) launched a new service called Credit Journey. The website provides free access to credit score information to anyone who signs up, regardless of whether they are the bank's customer. Previously, the Chase of only provided credit scores to select credit card customers, including those with the Chase Slate®. The new website will provide users with their VantageScore 3.0 along with other features.
In addition to allowing people to check their credit scores, the new website will allow customers to see how various financial actions will impact their score through a simulator. This is one of the more robust tools available to consumers thus far. It allows users to see how their score will be affected by anything from opening a new mortgage to having a tax lien added to their public record. Chase notes that the simulation is meant to provide users with an approximation, and is not exact. Therefore, the tool can be used to give the approximate direction one’s score will take, rather than the exact destination.
Chase is the second major U.S. card issuer to roll out such a feature for non-customers. Earlier this year Discover introduced its Scorecard feature, which offers similar services. One notable difference between Discover’s Scorecard and Chase’s Credit Journey is the credit model involved. Discover provides their users with a FICO score instead of VantageScores. Discover's service has the potential to be a much more valuable service for consumers, since FICO scores are more widely used by lenders. Because FICO has been around for decades, they have been able to capture a much bigger portion of the market. It is estimated that 90% of lending decisions rely on FICO, as opposed to VantageScore.
There has been an increasing trend in banks offering access to credit scores in recent years. However, most of America’s largest card issuers continue to offer this type of service to just their customers, as opposed to the general public. Last year, the White House begun working on agreements with these large financial institutions on initiatives that would drive these types of services. JPMorgan Chase, Bank of America, Ally Financial and Capital One were among the first to provide their cardmembers with access to their credit scores. It is unclear whether the President Elect, Donald Trump, and his cabinet will continue these efforts that were enacted by the Obama administration.
The topic of credit score access has also been a hot button issues throughout 2016 for other branches of the government. Two separate pieces of legislation were proposed earlier this year with looking to improve the interaction those in the U.S. have with their scores. The first bill was The Fair Access to Credit Scores Act of 2016 (H.R. 5010), which was introduced by representative Steve Cohen. The bill seeks to amend the Fair Credit Reporting Act and require the inclusion of credit scores with the free annual credit reports consumes are currently entitled to. Maxine Waters, a democrat from California, introduced the Comprehensive Consumer Reporting Reform Act of 2016 (H.R. 5282). If passed, the bill would, among other things, expedite consumers’ ability to correct errors on their reports, and give the Consumer Financial Protection Bureau (CFPB) explicit authority over the development of credit scoring models. GovTrack.us, an independent organization that tracks legislation entering congress, currently reports both bills have a 1% chance of actually being enacted.
The growing access to free credit scores is also expected to put pressure on the credit monitoring industry. Many services currently charge consumers a fee to access their credit scores. These products do offer features not provided by Chase’s Credit Journey. However, as parts of their offerings begin to be more widely available for free, it may become increasingly difficult to convince potential customers of the value provided by these paid alternatives.