Sallie Mae Is Now Offering Free FICO Scores to Eligible Student Borrowers

It’s easy to get excited about heading off to college, but it’s not always so easy to get excited about taking out student loans. Let’s face it: Comparing interest rates and reading over loan disclosures will never be as much fun as pizza and parties!

However, one student lender recently announced that it will provide a helpful benefit to eligible borrowers: Sallie Mae will now provide customers with free quarterly access to their FICO scores. Ready to hear more? Take a look at the details below.

Free FICO scores from Sallie Mae: The details

If you’re a student borrower, you’re probably interested in the details behind this new free FICO score initiative. According to a press statement, students with a Sallie Mae Smart Option student loan disbursed in the 2014-2015 school year will automatically receive the following:

• A free quarterly FICO score


• Personalized factors that are influencing the score


• Online credit score education


• Information about what the FICO score is and how it’s calculated


• Frequently asked questions (and answers) about credit

To find out why Sallie Mae is now offering these benefits, the Nerds reached out to Abigail Harper, a spokesperson for the company. “By giving our customers access to their FICO Scores, they will be better informed and empowered to make responsible financial decisions,” Harper said.

Where else can you see your FICO score for free?

It’s definitely a step in the right direction for Sallie Mae to provide free FICO scores to student borrowers; after all, the more details consumers have about their finances, the better.

Sallie Mae is hardly the only source for a free FICO score. As of July 2014, the following credit card issuers also provide free FICO scores to their customers:

• Discover


• Barclaycard US


• First National Bank

You can also get your FICO score from Fair Isaac Corp. or from any of the three major credit bureaus, but access isn’t free. You’ll have to pay a fee to order a copy of your score.

Nerd note: These days, there are a number of sites that provide you with a free credit score, but this isn’t the same as a FICO score. These websites use their own proprietary credit scoring models, which serve as a decent barometer of how your credit is looking.

However, most lenders use your true-blue FICO score when they’re deciding whether or not to extend you credit. This is why being given a free FICO score by Sallie Mae and the credit card issuers listed above is so exciting – it’s the tool most widely used by banks to judge your creditworthiness.

Don’t miss this opportunity to take control of your score!

If you’re an eligible student borrower with Sallie Mae, be sure to take advantage of this opportunity to take control of your score. As a young adult, you’re in a great position to start building good credit – this will make it easier for you to get a credit card, a good rate on your car insurance and even a mortgage someday. Consider achieving and maintaining a high credit score just as important as achieving and maintaining a high GPA!

If you’re not sure where to get started, here are the Nerds’ top tips for building credit as a student:

• Pay your bills on time; this is the most important thing you can do to create a healthy score.


• Consider getting a credit card as soon as you can, but don’t charge more than you can afford to pay off in one month.


• Only take out loans that you actually need; applying for too much credit in a short time can hurt your score.


• Pay attention to your quarterly credit score updates; it’s especially helpful to track your score’s progress over time.


• If you see a dip in your score, look back at your recent financial behaviors for a possible cause (like spending too much on your credit card or paying a bill late).


• Pull your credit report at least once per year and check it for accuracy; this is good habit to get into when you’re young!

The takeaway: Sallie Mae is now offering free quarterly FICO scores to eligible student borrowers. If you’re one of them, be sure to use this opportunity to your advantage!

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What’s the Point of Prepaid Cards When Rewards Cards Abound?

For most credit card users, the selection process can be taxing, as we filter through all the various rewards that are available for customer loyalty. We are enticed by hotel rewards, airline rewards, cold hard cash-back and other delicious possibilities. For those of us trapped in the reward mindset, we may wonder why the heck anybody would use a prepaid debit card.

Who uses prepaid cards?

The largest user population of prepaid debit cards are the underbanked and unbanked – a demographic that is almost completely opposite the regular credit card user, according to the Federal Deposit Insurance Corporation. This customer is often considered to be “nonprime,” lacking credit history or having poor credit, and thus not generally able to obtain a credit card. However, they value having the Visa or MasterCard logo on a prepaid debit card, and so attach an emotional and psychological value to having a debit card.

The prepaid debit card is also popular with the underbanked and unbanked. A 2012 FDIC survey reported that 8.2% of U.S. households are unbanked, or some 17 million adults. Twenty percent are underbanked, 29.3% do not have a savings account and 10% lack a checking account.

This demographic distrusts banks or cannot afford the fees that banks attach to checking and savings accounts. The prepaid debit card industry has exploded in growth because of this demographic, and 17.8% of the unbanked used a prepaid debit card in 2011, the FDIC reported. Prepaid debit card usage is used disproportionately by Hispanics, according to a report in HispanicRetail360.com.

Prepaid cards seen as safe haven from debt

The Pew Charitable Trusts conducted a survey on prepaid debit cards users and found a few other trends. It found that, “most have previously struggled with credit card debt, overspending, and unpredictable fees. They have turned to prepaid cards as a safe haven to avoid the risk of overdraft fees and as a commitment device, or a tool to restrict their ability to overspend or to incur interest charges. For most customers, prepaid cards are a mechanism to avoid the temptations and problems of the past.” Indeed, the survey showed that 66% of prepaid card users had a credit card. Forty-five percent have one and used it in the past year, and 21% used it more than a year ago.

To this point, the survey also revealed the four primary reasons prepaid cards are used are to buy things online, avoid credit card debt, avoid spending more money than they have, and avoid overdraft fees. Sixty-three percent reported having paid overdraft fees, 34% reported that they closed a checking account themselves because of overdraft fees, and 21% had an account closed by their bank because of these fees.

Bottom line: It’s apparent that the prepaid debit card user is a much different user than a credit card user. Forty percent of users have used other alternative financial services like payday loans or pawnshops. There’s no need to use these services if you have a credit card, so to users of prepaid debit cards, the notion of a “reward” is not even on their radar.

Prepaid card image via Shutterstock

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Your Official Credit Card Fraud Glossary, From “A” Through … “V”

It may seem silly to learn some of the most common forms of credit card fraud, but knowing the terms may come in handy. You may find yourself a victim and need to explain what happened to a credit card rep in order to dispute the charge. Using the right term can help them understand what may have happened. Terms may also help you understand a security breach at a third party, so you know how much risk you’re at.

Truthfully, the most important reason for knowing these terms is knowing what activity they imply. That gives you awareness if you sense something isn’t right. You’ll be able to identify fraud happening, possibly at the moment it occurs, if you are aware of all the different possibilities for fraud.

Most of all, we’re Nerds. We like telling you this stuff.

Presenting the official credit card fraud glossary

Account takeover — This occurs when a thief gets access to your account and changes your PIN and other important information, so he can access the account and you can’t.

Bust-out fraud — When the available credit is increased on a credit card.

Card-not-present — A common form of fraud that occurs when your card is somehow not present at the time the purchase occurs. This will occur most often with Internet transactions (though it’s not fraud if you’re doing the charging). Your card information may have been compromised by a third party security breach, skimming or cloning (see below).

Chargeback — Legitimate chargebacks exist, but fraudulent ones are when the card issuer reverses the amount charged by a merchant … back onto the merchant. This permits a thief to continue using a card while still retaining the purchased items. It creates a kind of bottomless well of credit because the credit limit never gets reached. The merchant often gets hit with big fees and is also out of the item sent.

Child identity theft — When a child’s information, especially Social Security number, is stolen and credit accounts are set up in their name. This is a great reason to pull your child’s credit report at least once a year.

Cloning – Using stolen credit card data, often from skimming (see below), to create a fake credit card. The data is often encoded onto a magnetic strip of the fake card.

Credit card fraud — A catch-all term for when your credit card is used without your authorization, or when it is used by yourself or others and neither pays the bill. That’s right – if you use the card and have no intention to pay the bill, you are committing fraud.

Dumpster diving — Sorting through someone’s garbage with the hope of finding personal information that can be used to commit fraud against that person.

EMV – A new security feature for credit cards which requires a microchip and PIN number on a card to make a charge.

Familiar fraud — This is essentially impersonation, when someone you know pretends to be you in order to get your personal information.

Fraud – This is the general term that encompasses any attempt, using some form of misrepresentation, to steal assets of another party. There are both federal and state definitions as what specifically constitutes fraud.

Fraud ring — A group of people who commit fraud.

Friendly fraud — When you charge something and deliberately engage a chargeback in order to keep the items you purchased without paying for them.

Identity theft — Using another person’s identify, especially a Social Security number, to obtain credit or steal assets.

Medical fraud — Stealing someone’s personal information to obtain medical care. It can sometimes be used to bill private insurance or Medicare and then get reimbursed for services that may or may not have been provided.

Pharming — To redirect people from a legitimate website to a fake website made to look like the real one.

Phishing — Usually done via an email that appears to come from a legitimate source, it’s actually an attempt to get you to provide personal information to a phony source. The thieves then use that information, often usernames and passwords, to commit fraud. These solicitations have many tell-tale signs, of which typos and poor grammar are the most common.

Shoulder surfing — When someone looks over your shoulder when you’re in the process of entering a PIN. This is just one reason why ATMs have wide-angle mirrors.

Skimming — A popular method of stealing credit card and other information. A skimmer is a small device that acts, and even looks like, a legitimate credit card scanner. It can be placed onto gas pumps or in ATM slots. It can be hidden behind counters at restaurants. You think you are engaging in a legitimate transaction, but the skimmer collects the data from your magnetic strip.

Smishing — The same as phishing, but the scam message comes via cellphone text message. You are asked to call a toll-free number, and led through an automated voice-response protocol, just like when you call your credit card company. You get asked to enter your credit card number, your CCV, and ZIP code.

Sniffing — Intercepting Internet traffic passing through a computer network. It’s a bit like eavesdropping on data passing through the network and grabbing up data that can be used for fraud.

Social Security fraud — When your Social Security Number is used so a thief can get your personal information. The key element in identity theft.

Synthetic fraud — Combining fake and real information about a person, in an attempt to create a whole new identity under which new credit accounts can be opened.

Vishing — Just like phishing, but a thief tries to steal personal information by installing software on your computer via video file.

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