Your credit score is just a figure, but it can have a big impact on your life. If it is high enough, banks will compete to lend you money at a temptingly low-interest rate. But if it is low, you can get stuck in the nose for everything from credit card interest to car loans.
A good credit score can mean the difference between being able to buy a house and spending your entire life in a vacation rental. It can even affect your chances of getting insurance or a good job.
So how do you look for what your score is? Is it really worth it?
Understand your credit score
Your credit score is basically a summary of how creditworthy you are. In other words, it shows the chance that, with borrowed money, you would pay it back in full and on time.
The actual number is calculated based on information in your credit report – or, to be precise, your three credit reports. These are maintained by the three major credit bureaus – who receive information from lenders about the people to whom they have granted loans. That information is about how much money you have borrowed over the years and how reliably you have repaid it.
At this point, there is another company. Bank has created a formula that uses the information from your credit reports to produce a number between 300 and 850 – your credit score. If you have borrowed money from different sources and always repaid it quickly, you should have a high score, indicating that you are running a good credit risk. But problems such as bankruptcy, invoices sent to a collection agency or even a lot of late payments can get a low score.
When lenders want to decide whether they will lend you money, they will draw your creditworthiness. This means that they pay one or more of the credit bureaus for a look at your creditworthiness report, and they can assess your Bank score at the same time. The higher your score, the greater the chance that you will be approved for a loan on favorable terms.
When people talk about your credit score, they usually mean your Bank score. However, some lenders prefer the newer Credit, developed by the three cooperating credit agencies.
If you call up your credit score from all three agencies, their number may not be the same. This is because they are based on three different credit reports and the information in those reports may not exactly match. For example, one agency may have your credit card bill from the previous month when you have charged $ 2,000 in costs, while another may have your bill from this month when you only charged $ 500. But in general, both your Bank score and your Credit should be virtually the same in all three desks.
Why your credit score is important
There is a common misconception that credit scores are not really important unless you plan to borrow money. For example, financial guru Dave Ramsey says that your credit score is really an “I love debt” score and that if you always pay everything in cash, you don’t have to worry about your creditworthiness.
It is a fact that nowadays it is not only lenders who want to know your credit score. Numerous individuals and companies, from insurers to potential employers, draw your creditworthiness to get an idea of how reliable you are. This means that if your credit is bad, it is not only difficult for you to get a car loan – you can also pay more to insure the car after you buy it. Moreover, you can be rejected for renting an apartment or even a job.
Even if you do not intend to borrow money in the near future, it is useful to know your score and, if it is low, take steps to stop it. If you check your credit regularly, you can also make mistakes that could damage your score.
A 2013 report from the Trade Commission showed that about one in four Americans made significant mistakes in their credit reports. These errors vary in importance. For example, your report may show a missed payment that your Loanarito was just too late.
More seriously, it can display accounts in your name that you have never opened – a sign that you have fallen victim to identity theft. If you check your credit, you can quickly find and fix such errors before they damage your credit score Loanarito.
Paid subscription services for credit
It may seem that if your credit score can have such a big impact on your life, you should have the right to know what it is. From now on, however, Bank and the credit bureaus are not legally obliged to tell you. The US Senate has submitted a bill Act of 2014, which would change this, asking credit bureaus to give you free access to your credit score once a year. Almost a year after its introduction, however, the law still had no vote.
Of course, while the credit bureaus are not required to disclose your credit score, they are very happy to make you pay for a look. All three credit bureaus, as well as Bank, offer “credit monitoring” services that offer you regular updates on your credit report and score for a monthly fee. The Bank service, available on the bank site, costs $ 29, 95 per month or $ 329 per year. The services available from individual credit bureaus range from $ 14, 95 to $ 19, 95 per month.
You can test many of these services for a trial period at a reduced price. These trial offers can give you a quick look at your credit score for a modest fee. However, you must ensure that you cancel the service before your trial expires. Miss that deadline by one minute and you will automatically pay the full price the following month.
A paid service can be useful to track your credit over time, but if all you want is a quick look at your credit score, this is a pretty pricey way to get it. However, there are now several sites that give you free access to your credit report (or even your credit score).
Free credit monitoring services
Before signing up for a paid credit monitoring service, even during a trial period, it is worth looking at free alternatives. Most of these services don’t give you access to your actual Bank score, but they can give you a pretty good idea of what it is and you don’t have to open your wallet to find out.