How to Check Your Credit Score and Credit Report
Originally Posted On: https://www.iquanti.com/
Strong credit helps you score great rates on loans and credit cards. It can help you rent better apartments, buy a home, and even land you a job in some industries. You can improve your credit by paying your bills on time, keeping low balances on credit cards and credit lines, and maintaining a diverse set of credit cards and loans.
Checking your credit score and credit report regularly helps you track your progress, hunt for errors, and find more ways to boost your credit. Below, we’ll explain how to check your credit score and report, how they work, and why you should check each every so often.
What is a credit score?
Your credit score is a number representing how risky lenders see you as a borrower. This risk is called creditworthiness.
There are numerous credit score models, but most lenders use the Fair Isaac Corporation (FICO) score. FICO scores you in a range of 300-850 and divides that range into several categories:
- Poor: 300-579
- Fair: 580-669
- Good: 670-739
- Very Good: 740-849
- Excellent: 800-850
Additionally, each of the big three credit bureaus — Experian, Equifax, and Transunion — may have a different score because not all lenders report your information to all three bureaus.
What is a credit report?
A credit report is a statement that shows lenders all your credit-related activities. It has information about debt repayments, loan applications, bankruptcies, and much more. Lenders look at your credit report alongside your score to get more details about who you are as a borrower.
For example, a new borrower may have a great credit score after paying off their first credit card once. However, it’s hard to tell if this new borrower is responsible with debt with such little credit history. The lender will notice the short history on the credit report, helping them make an accurate lending decision.
Ways to check your credit score and report
You should check your credit score and report regularly for a few reasons. For one, errors sometimes show up on credit reports, like a derogatory mark on your report for an account that belongs to someone with a similar name. Errors like these can needlessly drag your score down. Checking your report helps you dispute and remove errors like these to regain your score.
Additionally, keeping an eye on both helps you identify what’s impacting your credit score and create a plan to increase it. Whether you need to make more on-time payments or lower your credit utilization ratio, you’ll be able to see where there’s room for improvement.
With that in mind, here are three ways to check your credit score and report:
1. Free annual credit report
You can get a free annual credit report from each of the big three credit bureaus every 12 months. These reports don’t contain your score, but you can purchase your score from the bureaus or FICO separately.
2. Free credit monitoring sites
Many free credit monitoring websites let you check your credit score as much as you want for free. It’s not the same score the bureaus use, but it’s often close enough for you to make important credit decisions.
Additionally, many of these sites show you their versions of credit reports. They’ll even provide you updates on what’s changed. For example, if you paid off a credit card, you’ll see a score increase — and the site will also explain why your score went up.
3. Credit card companies/financial institutions
Finally, you can sometimes get your FICO score from credit card companies and financial institutions. For example, some credit card companies show you your score upon approval for credit cards. Additionally, these institutions may offer customers credit monitoring services similar to free credit monitoring sites.
Keep an eye on your credit score and report
The more you can improve your credit, the better your financial opportunities become. You can more easily apply for new credit cards and loans, rent an apartment, and buy a home. The key is to keep an eye on your credit regularly. This will allow you to address errors right away and make a plan to build your credit over time.
Notice: Information provided in this article is for information purposes only. Consult your financial advisor about your financial circumstances.