Your credit score is an integral part of your overall financial profile. It plays a significant role in whether or not you’ll qualify for competitive credit card products or get approved for a mortgage or apartment. In some states, a low credit score could also mean you’ll pay more for auto insurance.
So, you want to check your credit score regularly to know where your credit health stands. You will also avoid surprises when you apply for credit, like unexpected denials and unfavorable loan terms, and detect fraud or errors on your credit report sooner.
What Is a Credit Score?
Your credit score is a three-digit number that ranges from 300 to 850. It tells lenders and creditors how likely you are to repay your debt obligations on time. Consumers with higher credit scores are generally perceived as less risky in the eyes of lenders and creditors.
What Are the Different Types of Credit Scores?
There are two primary credit scoring models used by creditors and lenders – FICO and VantageScore. Both provide insight into how you manage debt obligations and have several variations.
FICO Scores are by far the most popular amongst creditors and lenders. They are used to make 90% of lending decisions. Here’s a breakdown of how your FICO Score is calculated:
- Payment history (35%)
- Amounts owed (30%)
- Length of credit history (15%)
- Types of credit (10%)
- New credit accounts (10%)
When you apply for credit, you may also find that lenders use industry-specific scores from FICO, like the FICO Bankcard, FICO Auto Score, or FICO Mortgage Score. This helps creditors gauge your risk of default for specific types of debt products, like credit cards, auto loans, and mortgage loans.
VantageScores also range from 300 to 850 but weigh information from your credit report slightly differently from FICO. They consider these factors in computing your credit score:
- Credit utilization (highly influential)
- Credit mix (highly influential)
- Payment history (moderately influential)
- New credit (less influential)
- Credit age (less influential)
Be mindful that some lenders have their own custom credit-scoring models. So, the three-digit number you see when you pull your credit scores could be different from the score they use to make a lending decision.
What Is the Difference Between a Credit Score and a Credit Report?
A credit score is simply a three-digit risk-based figure. However, your credit report doesn’t include your actual score – it only includes information used to compute your score. Focus on the contents of your credit report to ensure they’re accurate to give yourself the best shot at a good or excellent credit score.
How Often Should You Check Your Credit Score?
There’s no impact on your score when you check it. So check your credit score regularly, as it can change every time there’s activity on your credit report.
For example, if you pay down the outstanding balance on your credit card before the statement closing date, apply for credit or close an account, your score will likely change. And if negative information, like payments, collection accounts, or charge offs is reported, it will also impact your credit score.
What Are the Benefits of Checking Your Credit Score Regularly?
Beyond knowing what your three-digit number is at any time, there are other key benefits to checking your credit score regularly.
Provides Insight on Your Credit Health
Higher credit scores are a reflection of good or excellent credit health. However, you won’t know where you fall on the spectrum or where your credit health stands unless you check your credit score often. You can also get free credit monitoring with Experian to receive alerts each time your credit report is updated.
You Will Avoid Surprises When You Apply for Credit
There’s no surefire way to know if you’ll be approved for a credit card or loan, but having an idea of where you stand before you apply can help you determine if it’s worth applying. The credit score the lender uses to determine your eligibility could vary slightly from the score you see. But if your credit score isn’t anywhere near the minimum threshold, it may be best to hold off, or you could be setting yourself up for disappointment.
Helps You Detect Fraud or Errors Sooner
Credit scores can fluctuate almost daily. While this is quite common, drastic increases or drops to your score – either up or down – indicate significant changes to your credit profile. And this should also prompt you to review your credit report to ensure everything is reporting accurately.
You also want to confirm the accounts reflected are yours and you aren’t a victim of identity theft or fraud. If you spot issues with your report, file disputes right away.
How Can You Check Your Credit Score?
You can check your free FICO score with Experian. It only takes a few minutes, and you’re not required to put a credit card on file.
Experian also gives you access to your credit report from Equifax and TransUnion when you enroll in the Experian CreditWorks program. There’s a monthly fee of $24.99 after the 7-day trial period.
TransUnion and Equifax also sell credit scores on their website. Or you can check with your financial institution, lenders, or credit card issuers, as some offer free credit scores to account holders.
Another option is to visit Credit Karma and Credit Sesame and sign up to view your free VantageScore credit scores.
FAQs About Checking Credit Scores
Enroll in the CreditWorks Basic program from Experian to check your score for free. Also, reach out to your financial institution, lenders, and credit card issuers to determine if they offer credit scores to account holders.
The FICO score, which 90% of lenders and creditors use to make credit decisions, ranges from 300 to 850. Consumers with a score of 850 have a perfect credit score and pose the lowest risk of default on debt obligations.
Here’s a range of credit scores for your reference:
300 to 579 (poor credit score)
580 to 669 (fair credit score)
670 to 739 (good credit score)
740 to 799 (very good credit score)
800 to 850 (exceptional credit score)
When you check your credit score, a soft inquiry is generated. This has no impact on your credit score and will not lower it.