Check Your Credit Score For FreeYour credit score is a numeric representation of the way you handle money. It consists of the five main components of your financial life, with each component providing a certain percentage of the total, based on its importance. The figures are based on similar weightings:
|Length of history:||15%|
|How many types of credit in use:||10%|
Your score is a number, typically between 300 and 850, though some scoring models can deliver figures outside this range, In general, ratings break down into general categories, though individual lenders may interpret them differently:
|750 or above||Excellent|
|550 and below||Bad|
Where Does It Come FromThe information that goes into that little number comes from a credit report, which in turn comes from one of three major reporting bureaus: Experian, Trans Union, and Equifax. These bureaus collect information on your financial history and package it in an easily usable form. The bureaus cannot use your race, religion salary, employment history, address or other personal information. A low-income person who pays every bill on time can easily have a better rating than a millionaire who consistently neglects payments.
One potential downside of this focus on your financial history is that if you have never or seldom borrowed money or bought items on installment, you may have a low score or none at all even if you have never missed a payment. Young people are often advised to get a credit card and use it carefully, paying every bill on time. If you don't have enough history to establish a score, you will not have a score.
We each have more than one score. Different lenders prefer to use different criteria to rate risk, and request scores based on slightly different weightings of criteria. Your scores are normally quite similar, and if one source rates you significantly lower than others, it's worth a close check to see if there's a mistake.
The FICO ScoreThe most widely used figure is the FICO Score, issued by the Fair Isaac Corporation. 90% of major lenders use FICO scores to assess customer creditworthiness, making it the gold standard in credit scoring. To get a FICO Score, you must have an account that has been open for more than six months or has been reported to a bureau within six months. FICO generates many different scores for different clients, but the variation will usually be small.
The VantageScoreThe VantageScore was introduced in 2006 by the three major credit bureaus as a competitor to FICO. The Company claims that the model is more predictive and can rate more people than FICO's, but the competition doesn't mean much to you: they are competing to get lenders to use their product, which is where they make their money! Your main interest in knowing different scores is assuring that they are not radically different, which could indicate an error.
How to CheckYou can check where you stand without spending a cent! Let's look at some of the methods you can use.
Credit Karma, Credit Sesame, and QuizzleAll three of these separate services are completely free. All you have to do is sign up online, answer several questions to confirm your identity, and you have access to your score! You won't even be asked to supply your card information. Additional options, however, can require a small fee. Such options include services to analyze your credit history and look at what might be helping or hurting your credit score.
None of these agencies will give you your FICO score. While it's useful to know what your VantageScore 3.0 might be, FICO is where it's at, and it might be worth it to spend a few extra dollars to know what that is.
1. "What is a Credit Score" . MyFICO.com