Your credit score is a number – usually between 300 and 850 – that lenders use to predict if you will pay back a loan. It’s based on your credit history and your current credit information. For example, how many credit cards you have open and whether or not you’ve maxed them out.
Good or excellent credit means you’re a “safe” borrower. So, lenders are eager to give you a loan at a great rate.
Poor or fair credit usually reflects more risk. You’ll have difficulty getting a loan. Or if you do, it might not be for optimal rates.
Applying for credit cards with bonuses will also require a credit check – a Hard inquiry. This will affect your score negatively for the short term. But, responsible card usage over time will help to raise your score.
All credit scoring models consider the following important factors:
- Payments. Paying bills on time shows reliability.
- Average age of open accounts. The older, the better.
- Credit utilization. In other words, the total amount you owe divided by your total available credit. Less is more.
- Types of credit. Credit cards, mortgage, auto loan or a store account. Having a mix is good.
- Credit inquiries. Apply for credit too often and it sends a red flag to lenders. Keep it to a minimum.
FICO Score Vs. VantageScore
Ever heard of the Fair Isaac Corporation? Maybe in its short form: FICO? The most popular type of credit score is the FICO score.
Because the three credit reporting agencies – Equifax, Experian and TransUnion – have varying information about you, each one might come up with a different FICO score.
To make things more confusing, there are different types of FICO scores. Some are used to determine credit card eligibility. Others are used for mortgages or car loans. The formulas also change frequently. For example, FICO Score 8, FICO Score 9 and etc.
The second most popular type of credit score is VantageScore. In 2006, Equifax, Experian and TransUnion came together to create this new score.
Although more and more lenders are relying on VantageScore, it’s still not as utilized as FICO scores. But it’s easier to get your hands on a free VantageScore than a FICO score.
For the most part, you can assume that your VantageScore reflects your FICO score. Both are in sync and will fluctuate up or down together.
Why Check Your Credit Score
Your credit score – and therefore your credit history – has a huge say in many aspects of your life. From mortgage and auto loan rates to apartment and job approval. Your credit is the foundation of all lending and credit decisions.
By checking your credit score and obtaining your credit report, you’ll:
- Have a good sense of your financial “fitness”
- See areas to improve
- Spot mistakes and fraudulent activity
- Reduce the likelihood of rejection
- Get the best possible loan and credit terms
No one is perfect and that includes credit scores. A better score could equate to thousands of dollars a year.
Free Credit Score Sites
By law, you’re entitled to one free credit report every year from each of the three major credit-reporting agencies. The Fair and Accurate Credit Transaction Act of 2003 requires Equifax, Experian and TransUnion to provide a free credit report upon request through AnnualCreditReport.com.
But, the above gets you your free credit report only. Not your free credit score.
See below for sites 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 sites listed in the table above are open to everyone. Other institutions may also provide free credit scores if you’re a customer. Check your bank, lender or credit company to see if they offer this service.
The sites above will get you your credit score for free. But there are a couple that stand out for their exceptional features.
This is one of my favorite sources for free VantageScores. Credit Karma’s scores come from Equifax and TransUnion, giving you access to both in one convenient dashboard. You can compare one credit score against the other. If they don’t match, there are likely differences in your two credit reports.
Don’t fret though. It’s normal for credit scores to vary somewhat and for your credit reports to have varying content. For example, some lenders will only report to one or two credit bureaus and not all three.
It is possible, however, that differences in your credit reports could be a result of an error or fraud. If you find anything amiss, contact the credit bureau and correct it as soon as possible.
Credit Scorecard by Discover is one of the few sites that will give you your FICO Score for free. Plus, it’s available to you even if you’re not a member.
Discover cardholders have access to both Experian and TransUnion credit reports. Non-cardholders are limited to just Experian reports. You don’t have to apply for any credit cards, bank accounts or any other financial products.
Back in the old days, the only way to get a free credit score was to sign up for a monthly subscription service trial. To register, you needed to provide your credit card number. If you decide to continue the service, your card would be charged a monthly fee. Nowadays, there are plenty of truly free options.
Regardless of the company or method you choose to use, make sure to check your credit scores and reports regularly to maintain a healthy credit history.
|OFFER LINK||OFFER||OUR REVIEW|
|Bank of America Checking||$100 Offer||Review|
|Chase Private Client||$2,000 Cash||Review|
|Chase Total Business Checking®||$300 Cash||Review|
|Chase Premier Plus Checking℠||$300 Cash||Review|
|Chase Total Checking®||$200 Cash||Review|
|Chase Savings℠||$150 Cash||Review|
|TD Bank Beyond Checking||$300 Cash||Review|
|HSBC Premier Checking||$450 Cash||Review|
|HSBC Premier Checking||Up To $600||Review|
|HSBC Advance Checking||$200 Cash||Review|
|HSBC Advance Checking||Up To $240||Review|
|Ally Invest||Up To $3,500||Review|
|Betterment||1 Year Free||Review|