Being cluey about your credit score plays a vital role in your financial well-being. Ranging between 300 and 850, this number takes into account different aspects of your credit history like your payment history, credit inquiries, usage, duration of credit history, and any new credit you have acquired.
Your credit score can be compared to the grades you receive in school. Lenders and other creditors use this number, reported to the three credit bureaus, to decide whether to grant you that mortgage, loan or any credit. Moreover, it aids in decision making by insurance firms, landlords, and even employers. If your score is high, you are more likely to be approved, however, a low score could result in application denial or higher interest rates if approved.
Realising the importance of monitoring your credit score is critical. By being aware of your credit score, you can be well-prepared when applying for credit, it also keeps you in check. Monitoring your score is distinct from checking your credit report, as the latter offers a detailed rundown on your financial history including accounts, payment regularity, any delinquencies, bankruptcy reports, flags and messages, write-offs, and inquiries.
Kickstarting the process is very simple. Three major credit bureaus, TransUnion, Experian, and Equifax, provide access to your credit report for free once every 12 months on AnnualCreditReport.com.
Numerous free services can help you obtain a comprehensive understanding of your credit score from the major credit bureaus. Pairing free TransUnion credit reports from Credit Karma or WalletHub with those from AnnualCreditReport.com bolsters your potential to detect identity thefts or other issues during the initial stages.
Credit Karma offers free weekly updates on credit scores and reports from TransUnion and Equifax without the necessity of a credit card upon registration. It also provides a cost-free auto insurance score.
Catering to different fields, there are other more specialized credit scores apart from the traditional FICO score and the modern VantageScore 3.0.
For a different take, Credit Sesame offers a VantageScore directly from TransUnion, personalized smart money tips, and assistance to get through a financially-tight phase. It also provides free credit monitoring in case your profile or identity is compromised, and gives access to $50,000 in fraud resolution assistance.
You can also grab two free credit scores and reports by registering on Credit.com-your Experian report and VantageScore 3.0 which is updated monthly without needing a credit card for registration.
Complementing all these, WalletHub provides credit reports from TransUnion along with the TransUnion VantageScore upon registering.
Incidentally, some credit card firms offer free insights into your credit score. Examples include Discover Card, Barclaycard, Capital One's CreditWise, and First National Bank.
Ultimately, the best route to obtaining free credit scores and credit reports would be Credit Karma. You can confirm your credit report and credit score without causing any harm to your score by visiting AnnualCreditReport.com and requesting your free reports from the three national credit reporting bureaus.
Several financial actions have the potential to reduce your credit score such as making late payments, maintaining a high debt-to-credit utilization ratio, seeking to acquire new credit from multiple sources in a short span, closing a credit card account, and abstaining from using your credit cards or credit sources for a lengthy period.
Awareness of your credit score is one of the most fundamental steps towards maintaining financial well-being. Before applying for a loan, mortgage, or any other credit product, this number marks your reliability. The bigger this number, the higher your chances of getting approved with the probability of lower interest rates as a perk.