Table of Contents
- What Are Netting Escrows & How Does It Work?: The Best Guide - January 2, 2024
- The Secret About Prescriptive Easement: Top Guide 1 Must Know - December 4, 2023
- About Home Equity Loans In Texas And How Can One Obtain It - November 27, 2023
About Free Credit Score
Your Credit score is one of the most important numbers when it comes to financial decisions like personal loans, mortgages, or even credit cards.
Thus, it is important that you check your credit score before you apply for any of these as it gives you an idea of what products you can qualify for and the interest rates that you might get.
Checking your credit score has become very easy these days and it would be a smart move to get into the habit of checking it every month as checking your credit score does not affect your credit.
In fact, checking your credit score regularly may even improve it. If you observe any issues with your credit score like an unexpected dip, it may be a sign of a potential fraud or some errors in the credit report.
Let’s take a deeper look at what you need to know about credit scores.
What is a Credit Score?
Typically, a 3-digit number between 300 and 850, a credit score is the outcome of an assessment of your credit file.
This 3-digit number tells the lenders what they need to know about your ability to repay the loan, and if you pose any potential credit risk.
A number of details from your past and current credit accounts, like your payment history and the length of credit history, are considered for the calculation of credit score.
Depending upon the credit bureau (Equifax, TransUnion, and Experian) that pulled the credit score and the model used (VantageScore or FICO) the credit score range may vary.
The rating you receive, fair/average, bad/poor, or excellent/exceptional, depends on your credit score.
VantageScore vs FICO
FICO and VantageScore are the two widely used credit score models. The two models differ from each other in terms of how they consider and weigh various factors while calculating the credit scores.
However, there is some similarity in the range of credit score being 300 to 850 and the fact that the payment history is the most important factor for calculating a credit score.
Although FICO is more popular from the two models, experts recommend checking both FICO and VantageScore credit score to get a clear idea of what your credit score looks like.
Free Credit Score Checks
Making free credit score checks is now easier than ever as most credit card issuers offer credit score access to cardholders for free.
Credit card issuers like Discover and Citi provide free credit scores from FICO, while Capital One and Chase provide free credit scores from VantageScore.
You can get your free credit score check in no time by simply logging in on the credit card issuer’s website or from a free credit score service.
FICO and VantageScore pull your credit scores from any of the 3 major bureaus- Equifax, TransUnion, or Experian.
Here are some sources to get your free credit score check:
- Chase Credit Journey: Free VantageScore from TransUnion
- CreditWise from Capital One: Free VantageScore from TransUnion
Discover Credit Scorecard: Free FICO Score from Experian
Credit Score vs Credit Report
Your credit report will give you a more complete view of your credit and shows detailed information about your credit activities and current condition thus a credit score is very different from a credit report.
Your credit report contains details about:
- Personal information- name, address, Social Security number.
- Credit amounts- payment history, account balance, credit limit.
- Public records- liens, foreclosures, bankruptcies.
If you don’t have the time to check your credit report, you can quickly check your credit score to get an idea about your credit situation as your credit score is said to be a kind of substitute for your credit report.
How to Improve Your Credit Score
- Check for errors in your credit report- Before applying for a personal loan or a mortgage, be sure to check your credit report and look for errors. If you see any missing or inaccurate information, file a dispute.
- Pay bills on time- Late bill payments show on your credit report for 7 years and your payment history makes up about 35% of your credit score.
- Pay credit card balance to below 35% of the limit- The ratio of the amount of debt you owe to the total credit available is known as the credit utilization ratio which should ideally be lower than 35%
Conclusion
Checking your credit score or credit report is an important step you should take before you apply for a loan, mortgage, or credit card. Various sources provide free credit score checks.
Check your credit score every month to keep it under check and find errors as soon as possible.
There are several ways to improve your credit score which you must follow as a good credit score helps you get better loan and mortgage quotes.
