How to get your credit score
Your credit score tells creditors and lenders how likely you are to pay your bills and cover your debts on time and in full. The lower your score, the higher the risk they take for you and the harder it is to get approved for a new credit card, mortgage, or car loan.
Credit scores are on a scale of 300 to 850. While each financial institution determines what constitutes good or bad credit for their products, a rating in the mid-700s or higher will usually give you more options.
There are several important facts about your credit score that you should know:
Your credit score is a reflection of your risk at any given time. Scores change frequently as your credit balance, payment history, and other factors that make up your score change. This is why it is useful to check your score regularly.
You have more than one credit score. Scores can vary depending on which credit bureau – Experian, Equifax, or TransUnion – provides the data. Likewise, there are several scoring models, or formulas, used to calculate scores, the most common being FICO 8, followed by VantageScore 3.0. Sometimes credit bureaus have their own “educational” scores. The numbers may be similar, but there could also be a difference of more than 10 points.
Different lenders can use different scores. Since you have a handful of credit scores at all times, you might not know the exact number your lender is seeing. As Michelle Petrowski, an Arizona-based certified financial planner at Being in Abundance, explains, credit card companies typically rely on FICO 8 using data from all three credit bureaus, but banks are looking at others. versions of FICO when approving mortgages.
Here is how to get your credit score.
How To Get Your Credit Score For Free
If you have a credit card or car loan, you may be able to get your credit score – updated monthly – from your lender at no cost and hassle free by logging into your account online or viewing your statement. .
You will also usually see information on credit balances and other factors affecting your score, similar to that provided on a full credit report.
âIf it’s free, why not check it out monthly to stay on top of your progress,â says Petrowski.
Note that the score provided by a creditor or lender may not be a FICO 8 score. Chase and American Express, for example, offer VantageScore 3.0 scores based on Experian and TransUnion data, respectively.
There are two other ways to get your credit score for free. The first is to work with a nonprofit credit counselor or housing counselor, both of whom may be able to get a free credit score as part of their budget counseling or debt management services. .
Finally, there are a handful of credit score services that offer score reports for free – sort of. Credit Karma remains free for consumers because it relies on targeted advertising using your credit data. Credit Karma scores use information from TransUnion and Equifax.
NerdWallet is also ad-supported and offers TransUnion VantageScore 3.0 scores. Experian provides FICO 8 scores directly and free of charge in exchange for your consent to receive offers of products, services, and credits.
Credit Sesame, meanwhile, provides scores based on TransUnion’s data for its free customers, while paid subscribers get scores from the three bureaus updated monthly.
Before signing up for a “free” credit score, check to see if you are required to provide a credit card number. Some services may have “free” trials, but will charge you for your card at a later date if you forget to cancel.
Paid alternatives to request your credit score
A final option to view your credit score is to purchase it directly from the credit reporting bureaus. You can sign up for a single report of one office ($ 19.95) or all three ($ 59.85) at myFICO.com, or you can subscribe to identity theft protection plans which may include your credit reports, credit scores and credit monitoring. services.
How is my credit score calculated?
Your credit score incorporates a handful of factors related to your financial past and present:
- Payment history: on-time, late and missed payments
- Credit balance and usage: what percentage of available credit you are using and how much you owe
- Credit age: how long your accounts have been open
- Credit Investigations: Recent New Credit Requests
- Types of credit: the mix of credit cards and loans
- Negative marks: Any history of collections, foreclosures or bankruptcies
Again, different scoring models may weigh each factor differently, which is why not all scores are equal. Additionally, your credit reports – where some of your score data comes from – may not be the same across all three credit bureaus. The exact formula for credit score calculations is a well-kept secret.
At the end of the line
Your credit score provides a quick snapshot of your creditworthiness to help lenders decide if you are worth it. You can get credit scores for free from your credit card or loan company, although this is only a change in your score at any given time.
To get a better idea of ââfluctuations, especially if you’ve missed a payment, made a big purchase on credit, or opened a new account, consider asking multiple sources for your credit score frequently.