Maintaining a healthy credit score is crucial for securing loans, credit cards, and other financial products. A good credit score can open doors to lower interest rates and better financial opportunities.
Just as you’d schedule an annual health check-up, you should check your credit score at least once a year. Regular credit checks not only help ensure that all your loan and credit card information is accurate but also help identify any potential identity theft concerns.
There are other times when you may want to check your credit score more frequently. For example, before applying for a large loan, it’s essential to know what kind of interest rates to expect. Additionally, if you’re trying to repair your credit, monitoring your credit scores lets you track your progress.
5 Ways to Get Your Credit Score
Although you can get your free credit report once every 12 months, getting your credit scores can be slightly more challenging. Let’s explore the various ways you can find your credit scores.
1. Credit Card and Loan Statements
A great way to potentially access your credit scores for free (and often on a regular basis) is through a credit card or loan statement with an existing creditor. To find out if any of your credit accounts offer this service, check your monthly statement or online account.
Credit Cards Offering Free Credit Scores
Many credit cards provide a free credit score to customers. If you’re in the market for a new credit card, consider one of these to take advantage of this ongoing perk.
Keep in mind that while many credit card companies offer your monthly FICO score (the one most frequently used by lenders), others may use different types of credit scores. They may also only show you your credit score from one of the three major credit bureaus. The number you see may differ slightly from the three numbers your lender will review. However, it’s still a great starting point.
2. Free Credit Score Services
Numerous websites offer free credit scores. They make money from affiliate links and advertising, allowing them to provide credit scores for free. However, you may have to provide some personal information, and some websites require a credit card.
Credit Karma and Similar Services
Credit Karma and similar services offer a 100% free credit score. You’ll only have to enter the last four digits of your Social Security number when setting up your account, but never any credit card information.
Instead of getting your FICO score from these websites, you’ll likely get what’s called an educational credit score. Many often use VantageScore, a credit scoring model developed by the credit bureaus. It’s not the same as a FICO score, but it’s still based on information found directly on your credit report. So, while it may not match up exactly with what your lender pulls, it provides a valuable reference point.
3. Purchase a Credit Score
If you’re determined to get your actual FICO score and can’t find it through one of the previous methods, you have the option of purchasing it directly from MyFICO. They offer a couple of different one-time purchasing options, depending on your needs.
For about $20, you can choose a single credit bureau to receive both your credit score and credit report. For just under $60, you can get the same information from all three credit bureaus at once.
Additional Benefits from FICO
The advantage of going through FICO is that you get some analysis along with your credit scores and credit reports. First, FICO will identify the top factors affecting your credit score for each credit bureau. You can also use a decision simulator to determine how potential financial moves might affect your credit score.
Furthermore, if you’re applying for a specific type of loan, FICO gives you access to your credit score across various models, including those for mortgage, auto, and credit card lending. This information can help you understand what a specific type of lender sees when you apply for credit. That’s because these credit scoring models weigh certain factors differently than the traditional FICO score.
4. Credit Monitoring Services
Using a credit monitoring service may not be suitable for everyone, but it could be a suitable option in certain situations. Many credit monitoring services offer regular credit score updates as part of their services. However, you’ll have to pay a fee (usually on a monthly basis), which can vary depending on the level of service you choose from your provider.
Who Should Consider a Credit Monitoring Service?
Typically, two types of individuals might find this option sensible. The first is if you have bad credit and are working on repairing it. Signing up for a credit monitoring service typically lets you track your credit score regularly. This can be particularly helpful if you’re waiting to hit a specific benchmark credit score before making a big financial decision, like a mortgage or auto loan.
The second type of person who can benefit from a credit monitoring service is someone who has been a victim of identity theft or whose personal information has been compromised. If someone has stolen your information or managed to open fraudulent credit accounts on your behalf, a drop in your credit score can be one of the first indicators.
5. Non-Profit Credit Counselors
If you’re looking for help with your credit, a non-profit counselor may provide you with free access to your credit score. You may have to pay them a nominal fee for their service. However, they will give you your credit score and help evaluate your financial situation. They can provide unbiased advice on debt relief options and even help you create a budget to regain your financial footing.
HUD-Approved Housing Counselors
HUD-approved housing counselors can also help you get your credit score. They’re similar to credit counselors, but they specialize in foreclosure prevention. If you’re worried about keeping up with your monthly mortgage payments, it may be wise to reach out to a housing counselor for help.
Understanding the Different Types of Credit Scores
To better understand the credit scores you may encounter, it’s essential to know the differences between the various types of credit scores available. Some of the most common credit scores are:
- FICO Score: Developed by the Fair Isaac Corporation, this is the most widely used credit score by lenders. FICO Scores range from 300 to 850, with higher scores indicating better creditworthiness.
- VantageScore: Created by the three major credit bureaus (Equifax, Experian, and TransUnion), VantageScore also ranges from 300 to 850. It is similar to the FICO Score but uses a slightly different scoring model.
- Educational Credit Scores: These scores are not typically used by lenders but are intended to give consumers an idea of their credit standing. They are based on similar factors as FICO and VantageScore but may have slight variations in the scoring model.
By being aware of these different credit scores, you can have a more comprehensive understanding of your credit profile and how it may be viewed by potential lenders.
How Your Credit Score Affects Your Financial Life
Your credit score plays a crucial role in your financial life, influencing various aspects, such as:
- Loan approval: Lenders use your credit score to determine whether to approve your loan application. A higher score means a higher likelihood of approval.
- Interest rates: Borrowers with higher credit scores are generally offered lower interest rates, which can save you a significant amount of money over the life of a loan.
- Insurance premiums: Some insurance companies use credit scores to set premiums. A better credit score may lead to lower insurance costs.
- Employment opportunities: Some employers check credit scores as part of their hiring process. A poor credit score may impact your chances of being hired for certain positions, especially those related to finance or positions of trust.
- Renting a home: Landlords may use your credit score to determine your reliability as a tenant. A low credit score could make it more challenging to secure a rental property.
Being aware of the impact your credit score has on various aspects of your financial life emphasizes the importance of maintaining a healthy credit profile.
Tips for Improving Your Credit Score
Regardless of the method you use to check your credit score, it’s crucial to take steps to improve and maintain it. Here are some tips to help you boost your credit score:
- Make timely payments: Your payment history is the most significant factor in your credit score. Always pay your bills on time, even if it’s just the minimum payment.
- Keep your credit utilization low: Credit utilization refers to the percentage of your available credit that you’re using. A lower utilization rate is better for your credit score. Aim to keep it below 30%.
- Monitor your credit report: Under the Fair Credit Reporting Act (FCRA), you are entitled to one free credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) every 12 months. You can obtain your free credit reports through AnnualCreditReport.com. Regularly check your credit report for errors or signs of fraud. If you spot any discrepancies, dispute them with the credit bureaus immediately.
- Diversify your credit mix: Having a mix of different types of credit, such as credit cards, auto loans, and mortgages, can have a positive impact on your credit score.
- Avoid applying for too much credit at once: Each time you apply for credit, a hard inquiry is placed on your credit report, which can temporarily lower your score. Limit your applications to only when necessary.
By implementing these strategies, you can gradually improve your credit score and increase your chances of securing favorable interest rates and credit terms.
No matter what method you choose to get your credit score, make sure it’s part of your regular financial routine. Reviewing your credit history is helpful, but your credit score is a significant part of the bottom line for any type of credit application. It can also be incredibly motivating to improve your financial habits when you’re rewarded with a boost in your credit score.
By regularly monitoring your credit score, you can make informed decisions and maintain a strong credit profile. This proactive approach will help you secure better interest rates, improve your borrowing power, and ultimately, enhance your overall financial health. So, start checking your credit score today and make it a habit for a brighter financial future.