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Group offers free credit scores to troops, families

Nov. 15, 2007 - 12:11PM   |   Last Updated: Nov. 15, 2007 - 12:11PM  |  
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Service members and their spouses can now get a free credit score — an analysis of their creditworthiness — as well as a personalized action plan to improve that score.

The Financial Industry Regulatory Authority, formerly known as the NASD, is offering the free credit scores through its Investor Education Foundation in partnership with the nonprofit InCharge Institute of America, which developed a product called BrightScore.

BrightScore normally costs $19.95, but it will be free to troops and their spouses, who can access it through their personal financial managers on installations by attending one of FINRA's free financial forums offered periodically at military bases worldwide or by sending an e-mail to credit@finra.org">credit@finra.org. FINRA is providing 25,000 free credit scores.

A credit score is a number from 400 to 850 that comes from account information provided in an individual's credit report about outstanding loans, loan payment history and other factors. The higher the score, the better.

The credit score affects a person's ability to get credit — and what they can expect to pay for that credit. Lower scores mean higher interest rates. Lower credit scores also have other financial effects, such as higher costs for auto insurance.

"Managing and improving your credit score is one way that service members can achieve their financial goals," FINRA Chief Executive Officer Mary Schapiro said in a statement announcing the free credit scores.

Schapiro is also chairwoman of the FINRA Investor Education Foundation, which sponsors http://www.saveandinvest.org">SaveAndInvest.org as well as the Military Financial Education Program, launched in 2006 to provide service members with education and tools to improve their financial situations.

The free offer is also available to National Guard and reserve members serving on active duty and their spouses. It is available to service members overseas, too.

BrightScore will give service members and their spouses a detailed analysis of their credit reports, showing which items positively or negatively affect their score. The program then provides a personalized plan to improve scores. It also provides access to live professional counselors from 9 a.m. to 6 p.m. Eastern Standard Time Monday through Friday.

If service members or spouses have a credit score less than 620, they'll be able to use BrightScore two more times as they work to improve their score, said John Gannon, senior vice president of FINRA's investor education department.

With federal legislation limiting annual interest rates on certain consumer loans to military personnel and their families to 36 percent, some lenders outside the gates are no longer lending to the military because they can't afford to do business at 36 percent interest. But there are other options, such as military banks and credit unions, and other financial institutions outside the gate.

However, in order to get these loans, some military families may need to improve their credit scores, Gannon said.

FINRA conducted a pilot test of BrightScore with 600 service members from Feb. 12 to April 2.

"My husband and I recently requested our credit reports, and his needed to be improved, but we did not know how to go about it," one military wife wrote in comments to FINRA after taking part in the pilot program. "There are no services on base or in town for us to get guidance on how to repair his credit. This service has absolutely been a great help."

Another service member said a counselor had helped him take steps to dispute an unfair charge that a company had reported, in violation of the Servicemembers' Civil Relief Act. The counselor "was very helpful on how to take action and be proactive with my credit report and credit score," the service member wrote.

When surveyed after using the program, 25 percent responded. Of those, half said they had taken steps to improve their credit scores, Gannon said. Ninety-five percent of respondents said they would use the program again.

FINRA is the largest nongovernmental regulator of all securities firms doing business in the U.S. The FINRA Foundation's Military Financial Education Program has done educational seminars at more than 33 installations, reaching more than 8,000 service members and their families. The next seminar is Nov. 29 at Marine Corps Base Kaneohe Bay, Hawaii. (http://www.saveandinvest.org">Find out more information.)

FINRA's Investor Education Foundation supports research and educational projects that give investors the tools they need to better understand the financial markets and basic principles of saving and investing.

InCharge Institute is a national nonprofit group specializing in personal finance education and credit counseling.

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