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Your credit score can make a huge difference in your financial life. Whether it’s getting a mortgage, taking out a credit card, or trying to land a new job or place to live, your credit score could make or break your application.
“Good credit unlocks financial opportunities, and you won’t know what options are available to you unless you are familiar with your credit report and credit score,” says Rod Griffin, a senior director at Experian.
Checking your credit score is an important step in monitoring your financial health. In fact, before you apply for any type of credit—from a credit card to an auto loan to a mortgage—you should check your credit score so you will know exactly what lenders will see. There are plenty of ways to check your score for free. And no, your score won’t drop if you check it.
What is a credit score?
A credit score is a three-digit number, typically ranging from 300 to 850, based on your credit report. While there are many different credit scoring models, two stand out among the rest: FICO and VantageScore.
While FICO is the best known, lenders may use either or both. “No score holds more weight or authority over any other,” Griffin says. “They are just different scores designed to predict risk accurately for that lender or type of lending.”
No matter what the particular model, your credit report will be largely made up of your payment history and how much you owe. However, it also includes how many different types of credit you use, any new credit (like recent loan or credit card applications), and the length of your credit history.
FICO and Vantage weigh each component differently, which is why you might see different scores based on those different models. For instance, FICO weighs credit utilization—the proportion of available credit you use—at 30% of your total credit score while VantageScore weighs it at 20%.
What does your credit score mean?
“Credit scores and credit reports are like report cards,” says Kaeshier Fernandez, a financial counselor at Redstone Federal Credit Union in Huntsville, Ala. “If a credit report is a snapshot in time of all of your borrowing history, then a credit score is like your grade on how well you handle credit.”
In general, the higher your credit score, the more likely you are to qualify for credit and other borrowing opportunities, like an auto loan, mortgage, or credit card. The lower your score, the less likely you are to qualify and if you do, you could pay more in interest compared to someone with a higher credit score.
Interest rates fluctuate constantly based on market conditions, but right now, borrowers with excellent credit can get a 30-year fixed-rate mortgage for 1 to 2 percentage points less in interest, according to FICO. On a typical 30-year fixed-rate $300,000 mortgage, that difference could cost you more than $100,000 over the life of the loan.
Both VantageScore and FICO scores range from about 300 up to 850. While 850 is a perfect credit score, you don’t need to hit that number to have excellent credit. That’s because, for FICO, an excellent credit score is anything above 800. An excellent VantageScore is between 750 and 850.
Credit Score Level | FICO | VantageScore |
---|---|---|
Very Poor | 300-579 | 300-499 |
Fair/Poor | 580-669 | 500-600 |
Good/Fair | 670-739 | 601-660 |
Very Good/Good | 740-799 | 662-680 |
Exceptional/Excellent | 800-850 | 781-850 |
Experian
How to check your credit score
You can check your credit report from the three major credit bureaus—Experian, Equifax, and TransUnion—for free at AnnualCreditReport.com. But checking your report won’t give you your score. To get that, you’ll need to go elsewhere.
Many institutions let you check your credit score for free. Griffin says you can get your FICO score for free through Experian and many credit card issuers and banks also offer it at no charge to the customer. There are some apps, like Mint and Credit Karma, that also let you check your credit score for free. But Fernandez urges caution.
“View these kinds of apps simply as guides,” he says, as their accuracy depends on when different companies report to the credit bureaus and can fluctuate often. For instance, Credit Karma uses reports from two of the three major credit bureaus—Equifax and TransUnion. So if lenders are reporting your financial history only to Experian, you won’t see that calculation when you check Credit Karma.
Most credit card issuers offer free credit score checks, sometimes weekly but usually monthly, since FICO updates its scores monthly. Even so, scores are the same across issuers and lenders.
“Not all institutions pull scores from the same credit bureau, [and not] all institutions report to all three,” Fernandez says, so don’t rely too heavily on one place for score and report accuracy.
You can log into your account with your bank or credit card issuer and check your credit score. Depending on your notifications and permissions, you might get an email or text when your new credit score arrives. VantageScores tend to refresh every week while FICO scores update monthly.
One more note of caution: When you do check your credit for free, make sure you are working with a reputable institution, such as AnnualCreditReport.com—or a bank with whom you have an existing relationship. The Federal Trade Commission has warned some companies that promise to offer free reports use it as a pretext to collect and potentially misuse your personal information.
Do you have to pay to check your credit score?
In most cases, you don’t need to pay to check your credit score, (although you might be paying indirectly if, for instance, you pay an annual fee for a credit card that includes a score check as a perk.)
In general “a paid service may not be necessary” for most people, says Bruce McClary, a senior vice president at the National Foundation for Credit Counseling. But if you think your personal and financial information has been compromised, you might want to consider paid credit monitoring options.
All three credit bureaus offer credit monitoring, but only Experian is free. Equifax charges $5 a month and TransUnion charges $30 a month. All of these offer access to the bureau’s credit score and report, alerts when your report changes, and access to locking your credit reports.
Otherwise, being proactive, like setting account activity alerts, pulling your free credit reports and freezing your credit are good ways to safeguard your credit without paying for services, he says.
Does it hurt your credit score to check it?
You might’ve heard that checking your credit score can cause it to drop, and that’s not true.
“As a consumer, you can check your credit score as frequently as you like without causing any negative impact,” McClary says. That’s because there’s a big difference between a soft credit check—what you see—and a hard credit check, or what potential lenders see.
A soft credit check is when you check your credit score or credit report. Prequalification for a mortgage, auto, or personal loan (not preapproval) is also considered a soft credit check. In these instances, you’re not completing an application to borrow and lenders don’t see these self-checks in your credit report.
A hard inquiry is when you complete a loan or credit card application and give a lender approval to check your credit score and pull your credit report. In those instances, your credit score will take a dip, but it’ll rebound in a few months. For FICO scores, new credit makes up 10% of your total score, so these hard inquiries only have a small impact on your overall credit health.
Fernandez says there’s no harm in checking your own credit score as often as you’d like and doing so is important to make sure everything that’s getting reported is accurate.
What if your credit report shows a mistake?
If you pull your credit report and catch an error, you can reach out to major credit bureaus to get it removed. Not all bureaus get the same information reported to them, so you might only see it on one or two bureau reports and not necessarily all three. Each bureau has a way to report suspected fraud, so you can visit Equifax, Experian, and TransUnion sites to file disputes and fraud suspicion.
It could take a few weeks to get your dispute resolved. Keep this in mind if you’re looking to clear your credit report before an expensive purchase, like financing a home or car.
“Repairing damage from identity theft can be a tedious and time-consuming process,” Fernandez says. So if you sign up for a service to help monitor your credit, you could get notified of potential fraud right when it happens.
Checking your credit score is only part of self-monitoring your overall financial health. Keeping tabs on your credit report is also important. Since the start of the pandemic, AnnualCreditReport.com has been letting everyone pull their credit reports once a week.
The advice, recommendations or rankings expressed in this article are those of the Buy Side from WSJ editorial team, and have not been reviewed or endorsed by our commercial partners.
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