Credit scores are one of those things that’s pervasive in our culture. Everyone knows they exist, but only a few really know what they are and how they work. And whether you think credit scores are important or not, they are here to stay for the foreseeable future.
This means you should know your credit score.
If you want to skip the article and get your credit score immediately, you can get your free credit score from our partner Credit Sesame. (If you sign up and get your score, Credit Sesame gives us some coin to keep our mission going. We thank you ahead for supporting us by using our link.)
However, I do recommend you eventually read the article to learn more.
Your credit score is a three-digit number that’s calculated by algorithms and created by different companies. The largest and most well-known credit score model is the FICO scores followed by the scoring system developed by the three credit bureaus, the VantageScore credit score. Both scoring methods look at the information found in your report and calculate a score based on their proprietary system.
Your credit score is not you’re credit report and vice versa. Many tend to use the words interchangeably but they are not the same thing. A credit score cannot be generated unless you have a credit report. And a credit report begins once you have a reporting tradeline.
What is in a credit score?
Credit scores are calculated based on a variety of factors obtained from your credit report. FICO and VantageScore have shared the categories used to calculate scores such as payment history, amounts owed, length of credit history, new credit, and credit mix. However, we don’t know much else about the math behind the score.
Why are credit scores important?
To lenders, they represent your credit-worthiness and use your score as a preliminary check for approval. For you, its insight into the type of information found in your credit report. What’s really important is what your credit score represents and, therefore, what information is found in your credit report.
Everyone should review their credit report using AnnualCreditReport.com–the only federally mandated website to access your free credit report.
Why it’s important to know your score?
It’s important to understand where you fall within the credit score range. With this information, you can then decide what’s course of action is needed to maintain or improve your credit health.
Check your credit score for free
The Federal Credit Reporting Act (FCRA), established a federal law that guaranteed access to your credit report, but not to credit scores. Even if you get your free credit report through AnnualCreditReport.com, you’ll have to pay to get your credit score.
Fortunately, a few years ago, a financial startup wanted to change all that and began giving credit scores for free. Credit Karma changed the game and evolved the industry. And was quickly followed by Credit Sesame. The credit scores offered by these two companies are VantageScore credit scores.
These scores help you see where you fall within a range. Also, their apps are very helpful in educating you about ways to improve credit.
Checking your credit and getting your free credit score through these services will not impact your credit score. These services do a soft inquiry as opposed to a hard inquiry (e.g. when you apply for a loan).
The most important part of knowing your credit score is knowing where you fall in the range. Credit score range is from 300-850. The higher the score the better you look to lenders.Are you excellent, good, bad, or poor? You’ll never know if you don’t know your score.
|Smile RATING||WEBSITE||CREDIT SCORES||Monitor CREDIT REPORT||CREDIT BUREAU USED||ID THEFT insurance||FULL REVIEW||WHAT’S MY SCORE?|
|1||Credit Sesame||FREE||FREE||TransUnion||Yes||Read Review||Access Now|
|2||Credit Karma||FREE||FREE||TransUnion and Equifax||No||Read Review||Access Now|
If you want to receive a score from all three credit bureaus, you can sign up for more than one service. Don’t worry, it won’t hurt your credit score.
Credit Sesame uses TransUnion information and provides you the VantageScore credit score. The credit score is updated monthly. Additionally, they offer users free credit monitoring and $50,000 identity theft insurance for free. Get your free credit score with Credit Sesame.
The originator of free credit scores, Credit Karma, offers users to two free VantageScore credit scores from Equifax and TransUnion. Included in their offer is free credit monitoring. Get your free credit scores from Credit Karma.
Should you bother with using different apps? My quick answer is yes. You’ll get educational resources and benefits like free identity theft from Credit Sesame.
Why are credit scores different with the same credit bureau?
There are differences in the methodology used to calculate your score. You’ll notice a difference in your VantageScore and that’s normal. Make sure the information on your report is accurate.
But, you want the FICO score.
Currently, you’ll have to pay to get your FICO score. I reviewed myFICO for that purpose and you can read my analysis.
If you get your FICO score from myFICO, that score might be different from the FICO score lender may see. The same premise applies. Know where you fall within the score range.
And where else can you get scores?
Check with your bank, credit union, or credit card issuer because many are now offering free credit scores too. Call them or log into your account to find out. You may be required to enroll in the free program.
Financial institutions that are offering free credit scores: USAA, Capital One, and Discover.