Keeping track of your credit score is something that everyone of legal age should know how to do. Fortunately, this is not a difficult task with the tools available today. If you have Internet access, you can check your score. It’s a good idea to do this on a regular basis so you know exactly where you stand, particularly if you have recently made major changes to your finances or have applied for a loan or credit, as these actions can affect your credit.
What Is a Credit Score?
Before you start checking credit scores, you should understand just what your credit score means and why it is so important to lenders. Banks and credit card companies loan money based on risk. Lenders look at the potential risk of loaning money to both consumers and businesses. They want to know if a borrower pays bills on time or has questionable credit card history before loaning money.
To evaluate potential risk, lenders use credit scores. A credit score represents the reliability based on a consumer’s credit history. Consumers should review their credit history on a regular basis.
Credit scores can be retrieved once a year from one or all of the three major consumer reporting companies in the U.S. Annualcreditreport.com is the only website authorized to send credit reports, though others offer this service – often requiring additional and unnecessary steps. Each consumer has a credit score from each of the three credit bureaus: Equifax, Experian, and TransUnion. The VantageScore system used by all three establishments can be broken down into six categories:
- Recent credit – 10%
- Available credit – 7%
- Depth of credit – 13%
- Utilization – 23%
- Payment history – 32%
- Balances – 15%
Through the Fair Credit Reporting Act (FCRA), the three nationwide consumer-credit reporting companies are required to provide each consumer “with a free credit report, at your request, once every 12 months.”
You can obtain your FICO score free from myFico.com. Through myFico, you will receive a comprehensive explanation of “your FICO score and how lenders view you.” Consumers can purchase several paid services from myFico, including:
- FICO Standard includes one FICO score from Equifax or TransUnion, one credit report from Equifax or TransUnion, and an “explanation on the positive and negative factors affecting your score.”
- FICO Quarterly Monitoring of TransUnion actively tracks your credit’s every move, provides identity theft insurance and keeps you informed. The reports are handled via the Internet.
- Suze Orman’s FICO Kit Platinum includes 3 personalized credit reports, 3 FICO scores, and instant online access.
You can order a credit report from freecreditreport.com for free. For $1, you can order the instant credit report and score, but by doing so, you will start a 7-day trial membership period. If you don’t cancel the trial membership, you will be billed per month.
Annual Credit Report
Receive a free report every 12 months by requesting 1 from annualcreditreport.com. You can receive a free report on your credit history for each of the 3 credit reporting agencies: Equifax, Experian, and TransUnion.
Besides the free Equifax report, consumers can purchase the Equifax Complete Report for $39.95. This report contains scores from all three major credit reporting services.
Consumers can obtain a free report, or for $1, Experian will provide your credit report and score. The $1 report and score includes online access to the Experian score, credit risk level, factors for increases and decreases in scores, opportunity to contest a credit report, and 7-day-a-week toll-free support. After ordering the $1 Experian Report, a 7-day trial membership will begin that will need to be canceled before a monthly charge of $17.95 per month begins.
Consumers who obtain a free credit score from TransUnion should note that after the 7-day free trial period, a monthly charge of $16.95 will accrue. Your credit report from this service will contain your account history, personal info, information on the inquiries, and public record info, as well as an account summary.
Whether through a free or paid service, consumers should keep track of their credit scores. Staying on top of where your credit is will help you know exactly where you stand when applying for loans, credit, or any other service that may require a credit check. It’s relatively simple to check your score, so there is no good excuse not to know what your score is.