What Exactly Is a Credit Score?
Your credit score is a critical component of your financial life. It is a score between 300 and 850 that is determined based on a variety of characteristics such as your payment history, credit inquiries, credit utilisation, length of credit history, and any new credit you have.
Consider your credit score to be a grade in school. Lenders and other creditors provide information about you to the three credit bureaus, which impacts your credit score. They also use this score to determine whether or not to grant you credit, which determines whether or not you acquire that mortgage or loan. Employers, insurance companies, and landlords are among those who use it. The higher your score, the more probable it is that you will be authorised. However, a lower score implies you may be refused or, if granted, you may have to pay more in interest.
This is why it is critical to keep track of your credit score. Knowing your credit score allows you to be more prepared when asking for credit and keeps you on track. But how can you keep track of your progress? This post will offer you the dirt on your score as well as some of the numerous free sites that will tell you your rating.
The Value of Knowing Your Score
As previously stated, you should never go through life without knowing your credit score. This figure is updated on a regular basis. It typically changes every month, although it may vary more frequently depending on who is reporting.
Knowing your score implies you’re more likely to make sound financial decisions. With a lower score, you may be more hesitant to apply for new credit because you are more likely to be denied. If you have a high number of queries but few accounts, your credit score may suffer, and lenders may refuse to open a new account for you. On the other side, knowing your credit score is higher makes you a more appealing (and confident) candidate to creditors.
It’s important to remember that checking your credit score is not the same as reviewing your credit report. Your credit report details your financial history, including any accounts you have, how frequently you’ve paid them on time, any delinquencies, bankruptcy reports, flags and messages, write-offs, and enquiries. The date of any modifications to your credit history is also included in the report. This history can be used to account for and report any inconsistencies.
To begin, go to the three major credit agencies, Equifax, Experian, and TransUnion, and check your report for free at AnnualCreditReport.com. Each agency allows you to view your report once every 12 months. If you want to keep your credit score, you’ll have to pay them.
But why pay when your score is available for free?
Sign up for the following free services to obtain a comprehensive assessment of your credit score from each of the main credit agencies. Furthermore, combining Credit Karma’s or WalletHub’s free TransUnion credit reports with those from AnnualCreditReport.com can put you in a better position to detect identity theft or other issues in their early stages.
Credit Karma is the best for credit scores and reports.
Credit Karma offers free TransUnion and Equifax credit scores and reports that are updated weekly. The nicest part about this service is that you do not need a credit card to register.
The VantageScore 3.0 methodology underpins the free TransUnion and Equifax credit scores. This is a newer scoring methodology developed by the three major credit agencies in order to provide a consistent score from one bureau to the next. It is also said to be more accurate than regular FICO scores.
Important: In addition to the FICO and VantageScore, several creditors such as insurance firms utilise additional, more specialised credit ratings.
You also get free credit monitoring for your TransUnion report, a credit factors analysis that summarises key details from your credit report, and a free credit score simulator that shows you how various actions, such as adding a new credit card or increasing your credit line, may affect your credit score. Credit Karma also provides a free vehicle insurance score.
Credit Karma claims it does not sell information to advertising, but it does propose financial goods based on your credit history. If you register an account, it earns money from one of its advertising partners via its website.
Credit Sesame: Excellent for Personalized Advice
Credit Sesame is a credit monitoring service that differs somewhat from Credit Karma. This one provides users with instant access to their VantageScore from TransUnion. It also offers customised recommendations based on your credit profile and aspirations. Finally, it compiles all of your credit information and provides money-saving recommendations.
Credit Sesame also provides methods for lowering payments if you pay more in fees and interest. In addition, the service offers credit monitoring and notifications in the event that your profile or identity is hacked. Credit Sesame also provides free $50,000 in fraud redress support to consumers. This service, like Credit Karma, does not require a credit card to enrol.
Credit Sesame is one of the most effective free credit monitoring programmes available.
Credit.com is the best site for monthly updates
By enrolling on Credit.com, you may obtain two free credit scores and reports: an Experian report and your VantageScore 3.0, which is updated once a month. You must register for a free account, but you will not be needed to provide your credit card information.
The website also includes a free credit report card, which demonstrates how the information on your credit report impacts your score and provides suggestions for improving it.
Credit.com claims it does not sell your information to third parties, but it does profit if you apply for offers using advertising links on its website.
Best for Credit Alerts: WalletHub
TransUnion credit reports and the TransUnion VantageScore are available through WalletHub. To register, you must enter your personal information as well as the last four digits of your Social Security number (SSN), as well as answer a few questions to authenticate your identity. To finish the registration, the site also asks for your yearly income, monthly spending, and credit card debt.
The dashboard displays all of your credit accounts and balances, while the credit alert section provides a letter grade based on the factors that impact your score. For example, the site will alert you if your debt burden is too high in relation to your income or if your credit usage ratio is too high, which is harming your credit score.
Drop-down choices provide further information, such as your credit usage ratio. A simplified version of your credit report displays all of your current and closed accounts, as well as any negative information, such as collection accounts.
A navigation bar across the top of the website offers information about financial goods and services such as checking accounts and vehicle loans. Some of these firms pay WalletHub to advertise on the site and pay for premium positions.
Credit card companies will provide you with free credit scores.
Many credit card companies provide their users, and occasionally others, with a free credit score report, so you have alternatives other than those listed above. Some of the most notable are listed here.
The Discover Card
On each monthly statement, Discover Card holders receive their free TransUnion FICO credit score. Cardholders who are currently building their credit history may not get a score until they have paid for many months.
However, keep in mind that only the principal cardholder will obtain a free credit score. If you’re an authorised user on the card, you won’t get one.
Customers of Barclaycard receive a free FICO score on their monthly statements. They can also notice up to two criteria that impact their credit score, such as “balances on a bank card or revolving accounts that are too high relative to credit limitations” (a high credit usage ratio) or the “total of all balances on your open accounts that are too high.”
This information can assist you in improving your credit score by modifying your credit usage habits. Once you have three months of credit score information, Barclaycard will also give a chart illustrating how your credit score has evolved over time.
Capital One Credit Card
Anyone, whether a cardholder or not, can use Capital One’s CreditWise service. You may see your VantageScore 3.0 every month using this service and be notified of any changes.
One of the most useful aspects of this service is its simulator, which shows you which circumstances will affect your credit score and general credit health and by how much.
You can see, for example, how big of an impact a $1,500 credit card transaction or a $10,000 loan would have on your credit score.
The First Bankcard
First National Bank provides its credit card customers with a free FICO Bankcard Score 9, which is a credit card lending-specific score. In other words, it is not the score that a mortgage lender would use to determine if you may borrow money to buy a property, but it will give you an indication of where you stand. Once a month, your score is updated.
One of the most essential things you can do for your financial wellness is to know your credit score. Before you apply for a loan, mortgage, or other credit product, this figure will inform you just how creditworthy you are. The better your score, the more probable it is that you will be accepted. And there’s a strong possibility you’ll wind up paying less in interest.
Signing up for the free services indicated above will provide you with a comprehensive snapshot of your credit score from each of the main credit agencies. Furthermore, combining Credit Karma’s or WalletHub’s free TransUnion credit reports with those from AnnualCreditReport.com can put you in a better position to detect identity theft or other issues in their early stages. If all else fails, you may still get your credit score from any of the credit card businesses listed above.
Frequently Asked Questions
What exactly is a credit report?
A credit report is a record of your credit history that contains personal information. Your name, address, Social Security number (full or partial), date of birth, and maybe work information.
- Your current credit. Information regarding your credit, such as credit card accounts, mortgages, vehicle loans, and student loans. It may also include the conditions of your credit, the amount you owe your creditors, and your payment history.
- This is your public record. Any court judgements against you, any tax liens on your property, or whether you have declared bankruptcy.
- There are inquiries concerning you. A list of businesses or individuals that have recently requested a copy of your report.
What is the significance of a credit report?
Lenders, insurers, employers, and others may acquire your credit record from credit bureaus to examine how you handle financial commitments. As an example:
- Lenders may use information from your credit report to determine whether you qualify for a loan and the conditions of the loan (for example, the interest rate they will charge you).
- Insurance companies may use the information to determine if you are eligible for coverage and to calculate your premiums.
- Employers may check your credit record to decide whether to hire you if you grant them permission.
- Telephone and utility providers may use information in your credit report to determine whether or not to supply you with services.
- Landlords may use the information to decide whether or not to rent you an apartment.
Who gathers and reports my credit information?
Equifax, Experian, and TransUnion are the three major credit bureaus that collect and manage the information in your credit report on you. This information is then sent by credit bureaus in the form of a credit report to firms or individuals who request it, such as lenders from whom you are seeking credit.