'Free' credit score from Citi isn't free, but it is nearly worthless

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If you're a Citi credit card holder, you might have recently received notice of a promotion to get a "free" credit score.

You shouldn't sign up for this product.

Citi’s Benefit Builder website advertises the service as "complimentary optional protection" for Citi cardholders.

Both the website and the promotional email also state the service is free for 30 days; neither make clear what you'll pay after the first month.

The terms and conditions do make it clear, however, that any fee will be charged to you automatically and in perpetuity unless you call Citi to cancel.

It's also unclear how this service determines your score.

What's more, the fine print says the scores you receive through this program could be significantly different from the scores a lender would actually use.

In other words, you're getting an estimated credit score, which has little value.

It could, for example, give you a completely different picture of your loan eligibility than a real credit score would.

One of the sales points for Citi’s service is to "find out where you stand" so you're not surprised.

The idea that consumers should know their credit scores in advance so they don’t face any unpleasant surprises when applying for a loan is a common marketing tactic.

But there’s really no logic in signing up for a third-party service.

When you apply for any loan, you'll get your real score for free -- the score that the lender you want to work with will actually use to judge your creditworthiness, to determine whether to approve you and to decide what interest rate to offer you.

If you're worried about unpleasant surprises for a loan you expect to need several months or a year in the future, just apply for the loan well in advance of when you expect to need it. That way, you’ll know where you stand.

Merely knowing your score won’t tell you if you’ll be approved for any specific credit or loan product, anyway. Each lender has its own standards, and you’ll never know for sure if you’ll qualify before you apply.

You might wonder if applying for loans you don’t need is a good idea. Won’t it hurt your credit?

Applying for a loan results in only a very slight, temporary ding to your score.

And credit scoring formulas take into account that people tend to shop around for the best loan, so if you apply for multiple loans of the same type in a short period, you'll only get dinged once.

You might see a drop of five points that will last for a couple of months.

Unless you’re on the cusp of a cutoff point -- say, you have a 720 credit score and you want a mortgage that requires at least a 720 -- this ding isn’t likely to result in your being refused for any loan.

You can stay on top of the data in your credit report to make sure it’s accurate and to keep an eye out for signs of identity theft by getting a free copy of your credit report once each quarter.

You are entitled to afree copy of your credit report from each of the big three credit bureaus every 12 months from AnnualCreditReport.com. By staggering your requests in four-month increments, you can stay on top of your credit file on a regular basis.

You won’t get your score, and this method isn’t foolproof since credit data can differ across agencies, but it’s free and it’s good enough for most people.

You can also request your credit report for free any time a lender, employer, insurance company or landlord denies your application because of your credit history.