Being aware of your credit score is an important part of maintaining financial wellness. Your credit score is used by a variety of service providers, from leasing offices to credit card companies, to determine what kind of credit or loan you could be approved for.
The health of your credit score also influences interest rates, which ultimately means that your credit score helps determine how much it will cost you to borrow money.
With so much riding on the state of your credit, how can you stay up-to-date? Luckily, you have a number of options for getting a free credit score.
How do I get a free credit report?
First off, it’s important to understand the difference between a credit report and credit score. Think of your credit report as your entire consumer credit history on accounts both active and closed, including credit cards, auto loans, mortgages and so on. Your credit score is more like a snapshot of your credit at a given moment in time.
Knowing your credit score is essential for making informed decisions about your finances. Not only that, but it will also help you understand the criteria that creditors and lenders use to determine your qualifications. It’s a good idea to check your credit report once a year, though monitoring your credit score regularly is ideal.
Checking your credit score for free is pretty easy. Sources of free credit scores include:
Credit scoring websites
A simple Google search will point you in the direction of many online resources. Stick to reputable websites that have addresses beginning with “https” (the “s” is for secure, to help protect your personal information from prying eyes). One example is Annual Credit Report.com.
Existing credit accounts
A growing number of credit card issuers, banks and other financial institutions have started providing customers with free credit scores. Check your monthly statements to see if you already have access to a free credit report.
What about free credit reports?
Under federal regulations, you’re entitled to get one free copy of your credit report every 12 months from each of the three nationwide credit reporting bureaus: Equifax, Experian and TransUnion. You can order online from AnnualCreditReport.com or by phone at 1-877-322-8228.
Will a credit check affect my credit score?
Credit inquiries fall into two categories, hard and soft. A hard inquiry into your credit is usually done by a lender or service provider when you apply for credit or a loan. Hard inquiries do affect your credit score, but they make up only a small percentage of the total score.
The other kind of inquiry is a soft inquiry. A soft inquiry can occur when your employer checks your credit or an existing creditor checks your report. When you check your own credit report it is also considered a soft inquiry. This kind of inquiry does not affect your credit score.
Is my credit score the same as my FICO score?
Your credit score is a number meant to show your level of creditworthiness. This number is determined by looking at a variety of personal financial information. There are two main credit scoring companies, VantageScore Solutions and Fair Isaac Corp. (FICO).
A FICO score looks at five factors of your financial life to predict your creditworthiness. Those factors are your payment history, the amounts you owe, the length of your credit history, the types of credit you carry and how much new credit you carry. The FICO score is the most common kind of credit score used by lenders.
Why should I know my credit score?
Your credit score is an important piece of information that lenders and creditors use when they evaluate your viability. It will come into play when you apply for most loans, including car loans, student loans and home loans. Your credit score will also affect the kinds of credit cards you can get. Higher credit scores can give you access to lower interest rates and higher tier rewards programs.
If you’ve been thinking about applying for a rewards card or increasing your credit limit on your current card, your credit score will likely have an effect on the outcome. For this reason, among others mentioned in this article, it is good practice to check your credit score regularly.
How can I keep tabs on my credit score?
It’s essential to monitor what’s happening with your credit. There’s always the possibility that your credit score could be compromised in some way through an error or, worse, an identity theft.
Regularly monitoring your credit allows you to keep tabs on your credit activity and catch any suspicious activity in a timely fashion.
Whether you’re looking to buy a car, go back to school or rent a home, your credit score will affect what kind of loan or credit you can get. Finding out your credit score starts with requesting a credit report. This report will give you important information about your credit status and can help you to take steps to improve or maintain your score. It can also help you monitor your accounts and identify suspicious behavior in a timely fashion.