Your credit score is a number that normally ranges between 300 and 850, lenders will use this to see if you will pay back a loan on time or not. It is all based on your credit history and your current credit information. Think about how many credit cards you currently own and if you have you maxed them out before.
If you are in the Good-Excellent range that means you would be considered a “safe” borrower. Lenders will tend to give you a loan at a better rate. If your credit score falls within the Poor-Fair category, it would make it a little more difficult to get loans from lenders.
Applying for credit cards with bonuses will typically require you to do a credit check before applying a Hard inquiry. This will cause negative affects on your credit score for a short period of time. However, if you use your card responsibly it will help increase your score for the better.
Table of Contents
All credit scoring models consider the following important factors:
- Payments: Paying bills on time shows how reliable you are.
- Average age of open accounts: It is better to have an older account.
- Credit utilization: If you add up the total amount you owe and divide that by the total available credit, less means more.
- Types of credit: Owning a variety of credit cards, mortgage, auto loan or a store account is better.
- Credit inquiries: When you apply for credit too frequently, it will send a bad impression to lenders. Having it to the bare minimum is steadier.
FICO Score vs. Vantage Score
Fico stands for Fair Isaac Corporation, they are the most popular type of credit score. Since the three main credit reporting agencies: Equifax, Experian and TransUnion, they will carry lots of information about you, each company will have a different FICO score.
There are different types of FICO scores that they possess. Some of them are used to determine how eligible your credit card is. The rest are used for mortgages or car loans. The formulas they use will often change a lot. For example, FICO Score 8, FICO Score 9 and etc.
The second best type of credit score is VantageScore. In 2006, Equifax, Experian and TransUnion teamed up to work and design this new score.
Even though there are many more lenders that are more reliant on VantageScore, it’s still not used as often as the FICO scores. However, it would be simpler to get your hands on a free VantageScore than a FICO score.
Usually you can assume that your VantageScore will reflect your FICO score. Both companies are in sync and will increase or decrease together.
Why Check Your Credit Score?
Your credit score shows your credit history and how well you manage your accounts. It says a lot about how you live your life in many different ways, going from mortgage and auto loan rates to living arrangements and job approval. Your credit is the base product of all lending and credit decisions.
When you check your credit score and get your report, you’ll:
- Have a good idea of where your financial “fitness” stands
- Improve areas that need to be worked on
- View any mistakes and fraudulent activity
- See chances of rejection will be lower
- Receive the best value for loan and credit terms
Not all credit scores are perfect, but you can build them up to be. Having a better score would benefit you and equal up to thousands of dollars a year.
Free Credit Score Sites
According to the law, you are able to receive one free credit report every year from each three of the best credit-reporting agencies. The Fair and Accurate Credit Transaction Act of 2003 lists that Equifax, Experian and TransUnion have to give a free credit report when requested through AnnualCreditReport.com.
Remember, the companies listed above only gives you your free credit report. This does not include your free credit score.
View our list below for websites that offer free credit scores:
|Website||Credit Agency||Credit Scoring Model||Updated|
|American Express||TransUnion||VantageScore 3.0||Weekly|
|Capital One (CreditWise)||TransUnion||VantageScore 3.0||Weekly|
|Credit||Experian||VantageScore 3.0||Every 14 days|
|Credit Karma||Equifax & TransUnion||VantageScore 3.0||Weekly|
|Credit Sesame||TransUnion||VantageScore 3.0||Monthly|
|Discover||Experian & TransUnion||FICO Score 8||Monthly|
|Free Credit Score / Free Credit Report||Experian||FICO Score 8||Monthly|
All of the websites listed in the table above is available for anyone to use. Other institutions may include free credit scores if you’re a customer. Ask your bank, lender or credit company to see if they are able to give you this service.
Each of the websites listed above will offer you your credit score for free. However, there are some other sites that grab more attention with their excellent features.
VantageScores is one of the best resources to use for free credit scores. Credit Karma’s scores come from Equifax and TransUnion, allowing you to have access to both of them in one convenient dashboard. You are able to compare credit scores with one another to see which one is better. There will most likely be some differences between your two credit reports if they don’t match up together.
No worries, it’s okay for your credit scores to somewhat differentiate and for your credit reports to have different content. For example, specific lenders will only report to one or two credit bureaus instead of reporting to all three of them.
However, it’s not impossible that there would be some differences in the credit reports that you receive could be because of an error or fraud. If there is something that is not right, contact the credit bureau and fix it it as soon as you can.
Credit Scorecard by Discover is one of the small handful of websites that will offer you a free FICO Score. Even if you are not a member, it would still be available to you.
Discover cardholders will have both Experian and TransUnion credit reports for them to access. There will be limits to just getting the Experian reports for non-cardholders. It is not necessary for you to apply for any credit cards, opening bank accounts, or to invest in any other financial products.
Back then, there was only one way to receive a free credit score rating, and it was to sign up for a monthly subscription service trial. To apply for a free credit score, you would need to give them your credit card number. If you want to consider to continue the service, you would be charged a monthly fee on your card. Now, there are many other free options that are available.
If you are considering applying for a credit card or a loan, you’ll need to evaluate how your credit score would look to other lenders. You will be granted some free services to see how well your credit does across bureaus and their scoring methods.
No matter what company or method you choose to use, remember to check your credit scores and reports frequently to uphold a good credit history.