It is impossible to overestimate the importance of your credit score among the many bits of information you handle in your financial life. This is very important in deciding if one qualifies for credit cards, loans, mortgages, rental agreements, and so on. Furthermore, the higher your credit score is, the more favorable the circumstances are in the credit goods and services you are looking for, say low rates of interest. Credit scores should therefore be under constant observation to guarantee that they are accurate and that any fraudulent behavior or error is found right away. But how can one get the appropriate score when so many businesses provide individuals with free credit scores and credit reports? Here is what you ought to give thought.
What is considered when a Credit Score is issued
Before approaching where one may check their credit score, one must first familiarize oneself with what it is. Determined by the credit report that shows the credit history, a credit score is a three-digit numeric number. Credit ranges go from 300 to 850. In terms of demonstrating to the lenders that you will be able to pay back whatever credit you borrow, without difficulty, the greater the figure the better.
Credit scores are calculated based on five main factors:
This covers specifics about your account as a payer, including payment histories, the capacity to pay your bills and obligations on time, or any records of late payments, defaults, or judgments against you. Given that this one accounts for 35% of your whole score, it is most important.
The credit use ratio shows how your credit limits match your credit card balances. Your credit use rate is fifty percent, for example, if you have two credit cards with a total of five hundred dollars in limits and a balance of two hundred fifty dollars on both cards. Some best practices advise against this ratio exceeding thirty percent.
Thus, the duration of credit history tells the lenders how long one has been managing lines of credit. Especially if your credit history spans more than two years, the more points you have in any of these categories will help.
It displays your capacity to safely handle many credit products and pertains to the credit cards, installment loans, mortgages, etc., you have.
New credit inquiries show the frequency with which applicants have lately sought credit. Many hard requests on credit records over a short time might be seen as raising your credit risk and thereby affecting your credit ratings.
Where to Go to Get Your Credit Score
That is if you want to know what exactly is taken into account when determining your credit score Now that you know the basics of what goes into a credit score calculation, here are the most reliable places to check yours
AnnualCreditReportdotcom is a government-mandated site through which you can obtain your credit report from three major credit reporting agencies namely Experian, Transunion, and Equifax once a year and free of charge. Your credit report contains all the information used to arrive at your credit score, but it does not display the score itself. However, it is important to review the credit report to ensure that there are no negative things that are pulling down your score. The ability to receive the reports for free, at least once in twelve months, is a good way to monitor your financial status.
Credit Karma is an example of credit monitoring that provides users with free and full access to their TransUnion and Equifax scores anytime. They also offer free credit reports though these are limited to the two bureaus that contribute to calculating scores with them. However, the ability to see your scores as frequently as you desire through Credit Karma comes in handy. They earn their profit through selling credit cards and loans that their advertisers offer. So, if you are okay with such a business model, Credit Karma is quite reliable.
Free credit scores offered by credit card companies
Some credit card firms also offer free credit score and reporting services to the holders of credit cards as part of their benefits. For instance, Discover Card offers free FICO scores; these scores are obtained from TransUnion and the customers can use them frequently. FICO scores are the most common model most issuers are said to base decisions on when issuing credit cards. The only catch is that while most of these companies offer free access to the score, it is usually only for their approved customers. However, if you possess credit cards from Discover, Chase, Citi, or Capital One, it is advisable to verify whether the issuers offer free scores.
MyFICO
If you want a one-time FICO score check or a single FICO score from one bureau, then Credit. com is the best choice. Yes, you have to pay for the service, although the price is as low as twenty dollars per month. But there is no better method of monitoring your scores frequently and closely than lenders do when approving or rejecting your credit applications. MyFICO reports your total FICO credit score and also additional valuable FICO scores from the three credit bureaus. This is complemented by the FICO Auto Score and Bankcard Score which can present you with information on your chances of getting approved by auto lenders and credit card companies, respectively. MyFICO is valuable for serious credit monitoring and the best way to view your scores for the money and the peace of mind it offers.
Bottom Line
Regular monitoring with the help of credit scores received from several different sources is a must when it comes to financial health. Don’t forget that you have one free credit report every year at AnnualCreditReportdotcom and you can check as many scores as you want with the help of services like Credit Karma. For greater credit score information, there are several services offered through MyFICO that offer a much more detailed and tailored view of your creditworthiness to lenders. Credit tracking at a mix of these sources will assist you in detecting and challenging any credit report mistakes or observing how your credit decisions affect your score and credit status.
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