There’s a common misconception that if you check your credit reports from the three nationwide credit bureaus, you’ll also see your credit scores. Unfortunately, that isn’t true. Credit scores are not typically included in credit reports from the three nationwide credit bureaus. However, here are a few things you should know about credit scores before we discuss where you can get them.
To begin with, you should know that you have more than one credit score. Essentially, credit scores represent your likelihood of paying your bills on time or your credit risk. What’s more, in order to calculate your credit score, your credit reports are used.
Additionally, various credit scoring providers like Equifax, Experian, TransUnion, and FICO use different types of credit scoring models and calculate credit scores using different types of information. Due to the fact that some lenders may report information to one or two, or none at all, the three nationwide credit bureaus will also provide different credit scores. It’s also possible that lenders and creditors will use additional information to determine whether they will grant you credit, other than credit scores.
The Importance of Checking Your Credit Score
Since a large number of credit card issuers and personal finance sites are offering free credit scores in recent years, access to free credit scores has increased dramatically. In fact, a 2020 report by Javelin Strategy and sponsored by TransUnion, found that 15% of Americans use more than four sources to check their credit scores, 7% use three sources, 17% use two sources, and 38% use only one.
Consequently, 52% of Americans surveyed in the study checked their credit score within the past 30 days. Still, that’s a small percentage of people who are checking their credit scores. And, that’s a shame.
According to the same study, consumers who regularly check their credit score have significantly higher confidence in personal finance. Approximately 75% of consumers who monitor their credit score once a month believe they have control over their day-to-day and monthly finances, compared with 54% of consumers who monitor their score rarely and 65% of consumers who monitor less frequently. In addition, sentiments like “I am on track to meet my longer-term financial goals” are on the rise as well.
But, that’s not the only reason why you shouldn’t ignore your credit score.
Provides you with a better understanding of your financial situation.
Credit scores are essential for fully understanding your financial situation. When it comes to buying a home, applying for an auto loan, or making other large purchases, knowing your score can help you decide when is the right time.
Increases your chances of improving your score and qualifying for a better rate.
When you understand how your credit score is calculated, you can take strategic steps to improve or build it over time. Several scoring websites allow users to simulate changes to their score based on factors such as on-time payments, extra payments, and new credit applications.
Suffice to say, this could save you thousands in the long run.
Based on your eligibility, you can compare financial products.
It’s helpful to know your credit score so you can determine if you qualify and if it’s worth pursuing. In addition, many lenders offer a prequalification process that helps potential borrowers determine the interest rate they may qualify for.
Allows you to detect and dispute fraud.
According to a Federal Trade Commission study, about one in four consumers identified potential errors on their credit reports. Your credit score may tell you that your credit changed, but not why. As such, it’s easier to discover these errors if you check your credit report.
Your credit score may be affected if your report contains information from someone else’s report (called a mixed file) or contains other errors. If you plan on applying for loans soon, you don’t want to delay resolving these issues.
There may be red flags that indicate fraud.
Keeping an eye on your credit score regularly will allow you to spot unusual activity that may indicate fraud sooner. If you recognize a sudden and large increase in your credit usage right away, you can file a dispute and get your credit back on track.
Besides being frustrating, this can be costly. According to the Federal Trade Commission, the median amount of money lost to credit card fraud in 2020 was $311. Furthermore, To undo identity theft, it usually takes 100 to 200 hours over six months.
Ways to Check Your Credit Score
Take a look at the statement on your credit card or other loan.
Most credit card providers allow cardholders to check their credit scores for free. You can often view your score history with these tools and see what changed recently. Also, some providers let customers forecast how their scores would change based on variables such as on-time payments, credit limit increases, and home loans.
Furthermore, many major credit card companies and some auto loan companies now automatically calculate credit scores on a monthly basis for their customers. If you log in to your account online, you will be able to see your score on your monthly statement.
To access your score, however, you will need to sign up with most providers.
Check out a website that offers free credit scores.
Free credit scores are available on numerous websites. But, always read the terms carefully before signing up. In general, these websites provide credit reports, scores, and/or credit monitoring, which are frequently updated from week to week. Basic credit score updates are free. Some websites, however, charge a monthly fee for more advanced services.
It is possible to find some free websites that offer educational scores that are aimed at giving you an idea of your credit score. For example, through Experian, you can obtain your free FICO Score.
You can also request a free copy of your credit report from each of the three major credit reporting agencies, Equifax, Experian, and TransUnion, once a year through AnnualCreditReport.com. Or, for toll-free service, call 1-877-322-8228. In addition, you have the right to see your credit report within 60 days of being denied credit or if it is inaccurate, or if you are on welfare, unemployed, or on welfare.
To make sure that each credit report contains accurate information and is accurate, request one from each of the three credit reporting agencies. The agency must provide you with a dispute form within 30 days of receiving your report if you find an error.
Contact a nonprofit credit counselor.
Getting out of debt is the goal of credit counseling. The counselor could offer advice on money management, help the borrower create a budget, work with creditors, and help them develop healthier financial habits.
A nonprofit credit counselor is a safe and reliable alternative to paid credit repair and debt settlement services that can negatively impact your credit score in the long run. Contact a reputable credit counselor through the National Foundation for Credit Counseling if you’re interested in working with one.
Buy a score.
Scores are also sold directly to consumers by credit reporting companies. As an example, buying your FICO credit score is possible at myfico.com. It is possible to purchase scores from other services as well. There is no requirement that you purchase credit protection, identity theft monitoring, or other credit card customer services at the same time that you obtain a credit score.
There are some sources of credit scores that provide a credit score that is considered educational rather than one used by lenders. According to a report published by the CFPB, educational scores differ from those used by lenders. Most people will benefit from an educational score since it is close to the scores used by lenders. Nevertheless, some people’s scores may differ quite a bit. It is therefore important to know what type of credit score you need before you choose where to get it.
What Do Credit Scores Mean?
An individual’s credit score can provide valuable insight into his or her credit health. But, for a good credit score, you need to understand how they work, what they mean, and how they work.
What’s more, it’s likely that you have multiple credit scores because there are so many credit scoring models available. Because of this, you may get a different score from one site or product than from another.
Therefore, don’t get too caught up in a particular score. Rather, think about where you fall in the range. The score will usually come with some context in addition to the number on most websites and card issuers.
You will typically receive information regarding your score and whether it is poor, fair, good, very good, or excellent. It is also likely that you will find information about how your score was determined. It is essential to understand what lenders think of your creditworthiness so you can get the credit products you are most likely to qualify for based on your score range.
What Affects My Credit Scores?
In order to improve your credit scores, you need to understand the factors that determine them. There are five main factors that affect the FICO Score, the credit score version you will receive through Experian. The weights of each are different:
Payment history.
Approximately 35% of your FICO Score is determined by your payment history. Late or missed payments can negatively affect your FICO Score, while keeping it high is best achieved by making payments on time.
Amount of debt.
In order to determine your credit score, 30% of the score is determined by the amount of available debt you’re using. This is known as your credit utilization ratio. The amount of credit that is being used is divided by the total amount of credit that is available to you. You have a 30% utilization ratio if you have three credit cards with a combined credit limit of $10,000. For the best scores, keep your ratio below 30%.
Length of credit history.
The average age of all your open accounts, including your oldest and newest accounts, accounts for 15% of your FICO Score. The longer you’ve used credit, the better your score is likely to be.
Amount of new credit.
New credit accounts for 10% of your FICO Score. In this calculation, you’re taken into account how many accounts you’ve opened recently and how many hard inquiries you’ve made recently. Too many new accounts and inquiries could indicate greater credit risk.
Credit mix.
It’s estimated that 10% of your FICO Score is attributed to the types of credit you use. Credit cards and installment loans are different types of credit, so if you have them both you’ll score higher than if you only have one type.
Along with your credit score, you should receive guidelines on your score profile and why your score is ranked the way it is. In addition to this, you will learn what is lowering your score and what is boosting it.
VantageScore 3.0 credit score ranges.
Most credit scores are based on FICO scores. In fact, 90 percent of top lenders use FICO Scores. But, what about the other 10 percent? Well, for lenders that don’t use FICO, they probably use Vantage Score instead.
There are a variety of ways lenders can view credit score ranges, and these ranges differ depending on the scoring model. An average VantageScore 3.0 credit score is between 300 and 850. They can be categorized into four categories: Excellent, Good, Fair, and Poor. Below is a breakdown of how they work.
- Excellent (781–850). In addition to having several options when it comes to repayment terms or repayment periods, you may qualify for the best financial products available. Just be aware that lenders can still deny your application even if you have excellent credit scores.
- Good (661–780). An application with good credit is less likely to be denied than one with fair or poor credit, and it’s more likely to be approved with a low interest rate.
- Fair (601–660). Getting approved for a financial product may give you several options, but the best terms might not be available to you.
- Poor (300–600). There are many loans and unsecured credit cards that may be difficult to get approved for. If you are approved, you might not qualify for the best terms.
VantageScore 3.0 credit score factors.
Despite the similarities, each credit scoring model relies on a unique combination of factors to determine your score. The following are the major factors that determine your VantageScore 3.0 score.
- Payment history (extremely influential). On-time payments make up the majority of your credit scores. In your credit history, late or missed payments can significantly affect your scores.
- Age and type of credit (highly influential). Over time, lenders can see that you have been responsible in managing your accounts. A positive credit history (such as credit cards and personal loans) may also be considered a plus by lenders.
- Credit utilization (highly influential). In terms of credit utilization, your credit utilization rate measures how much credit you use compared to what you have available. Again, you should aim for a credit utilization rate below 30%, meaning you use less than 30% of your available credit.
- Balances (moderately influential. This factor considers how much credit you already have and not how much debt you have across your accounts. If you’re already owed money elsewhere, lenders may be less likely to extend more credit to you.
- Recent credit (less influential). Lenders want to know what you’ve done recently in terms of credit activity, since it can be used as a predictor of future behavior. Your scores could be affected if you’ve opened several new accounts recently.
- Available credit (least influential). In the case of approval, a large amount of available credit may indicate you won’t use all of it.
Why Your Credit Score Differs
Credit scoring model used.
Your credit history can be scored using a variety of models. In most cases, lenders use a credit scoring model such as FICO or VantageScore. Your credit history is evaluated by both companies using similar factors. However, they use different formulas to determine which factors are most important.
Score version.
In addition to base scores, there are industry-specific scores available. Lenders use base scores, such as FICO® Score 8 and VantageScore 3.0, to determine your chances of repaying a debt. An industry-specific score, like the FICO® Auto Score 9, indicates the odds of you repaying a specific loan.
Credit bureau.
Credit scores are calculated using information listed on your credit report, which comes from one of the three major credit bureaus – Experian, Equifax, or TransUnion. Each bureau receives information differently, which is explained in more detail below.
Information provided to the credit bureaus.
Information about your credit accounts may not be shared equally between the credit bureaus. However, lenders are not required to report to any or all of the three bureaus. It’s not guaranteed that the information will be the same across the board, which can affect your score.
Date scores are accessed.
There may be discrepancies between your credit scores if you view them at different times.
Errors on your credit report.
Any errors on your credit report can affect your credit score. A report with errors on only one bureau may result in a different credit score than one with errors on every bureau. In order to protect your credit score, you should dispute errors on your credit report as soon as possible.
Which Credit Score Matters the Most?
Lenders use FICO® Scores in 90% of lending decisions, even though there is no exact answer to which credit score matters most.
In addition, you need to think about why you’re checking your credit score before narrowing down which credit score to check. In case you want to access your credit score merely to track your finances, FICO® Score 8 is a good choice. It can also be used to determine which credit cards you qualify for using this version.
You may want to review an industry-specific credit score if you plan to make a specific purchase. There are specific FICO scores that are used for various financial products. You should check FICO® Auto Scores if you plan to finance a car with an auto loan, while you should check FICO® Scores 2, 5, and 4 if you plan to purchase a home.
FAQs About Checking Your Credit Score
1. How can I check my credit score?
There are three primary ways to check your credit score: free credit scoring websites, your credit card provider, and non-profit credit counselors. The easiest way to get your score is probably through your card issuer. All major issuers offer free access to credit scores either on a weekly or monthly basis.
2. Does checking your credit score lower it?
The act of checking your own credit score is considered a soft inquiry and will not affect your credit score in any way. You can check your score without affecting your credit. But, when you are getting ready to apply for new credit or loan, it’s a good idea to check your credit score regularly.
Make sure your credit report is accurate at least once a year, in addition to checking your credit score. The appropriate credit bureau can be contacted if you believe something is inaccurate.
3. Who determines credit scores?
There are three major credit bureaus: Equifax, TransUnion, and Experian. However, your credit score will usually be within the same range regardless of the credit agency. Typically, your credit score can be derived from any of these agencies on its own.
4. How often is my credit score updated?
Although it sometimes feels as if your credit score is constantly being updated in the background, this isn’t true. In order to score a credit report, one must request it and create it.
As a result, you may want to ask yourself what has changed since you last checked your credit score?
Your scores can be affected by a variety of factors, including:
- Your new credit application has been approved.
- An account has been opened or closed.
- An update of your most recent payment and account information was sent to the credit bureaus by your creditor.
- The credit bureaus received a collection account in your name from a collection agency.
You may notice that your credit scores fluctuate quite often if you check them regularly. A combination of the above may be responsible for the changes. A credit score may also take into account several time-related factors, such as how long it’s been since a negative item has appeared on your credit report or the average age of your accounts. In other words, even if all else remains the same, credit scores can change over time.
5. How often should you check your credit reports?
Credit reports should be checked at least once a year, according to the Consumer Financial Protection Bureau. According to credit expert John Ulzheimer, you should check your credit every month. By using AnnualCreditReport.com, you can obtain free credit reports from all three major credit bureaus every week until the end of 2022.
