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In 1970, the U.S. Congress passed the Fair Credit Reporting Act (FCRA) to promote the accuracy, fairness, and privacy of consumer information in the files of consumer reporting agencies. Now, U.S. consumers can access their credit reports for free once per year at AnnualCreditReport.com or through one of the three credit bureaus. This provides helpful insight into your credit score, a rating between 300 and 850, and your level of creditworthiness as a borrower.
Highlight & Key Takeaways
- Many free options, such as credit monitoring websites and lending services, are available to consumers who want to check their credit scores.
- Monitoring your credit score can help you understand your creditworthiness and track your efforts to improve your score.
- You can check your score as many times as you want without hurting it.
- The average credit score in the U.S. is 714 which falls neatly within the good category for FICO and prime for VantageScore.
Where to Check Your Credit Score for Free
It’s a good habit for borrowers to check their credit scores for free every few months. Doing so can inform you whether your score has increased or decreased and alert you to potential problems. And today, because of the importance of maintaining a healthy credit score, many creditors and financial institutions provide free access to your credit score.
The best places to access your credit score for free are through annualcreditreport.com, Experian, or Equifax. There’s no penalty for checking your credit score, either. When you check your credit score, it is considered a soft credit inquiry, which in this case, is simply a way for you to understand how your credit is looking.
Going to one or all of the three credit bureaus is another excellent way to keep tabs on your credit scores. The credit bureaus receive information from creditors and lenders, which they use to generate credit reports. You can access your credit reports at least once a year for free from each bureau. And even better, you can also get free credit scores.
It’s important to know that you can also pay for credit monitoring services through the third credit bureau, TransUnion. Equifax and Experian also have paid services for credit monitoring. Credit monitoring services give you access to your credit reports, but more so, provide you with notifications and alerts when there is a sizeable change to your score or the information in those reports. This is a great way to ensure that your credit score is improving due to your good financial behaviors or, conversely, if your score has gone down because you are a victim of identity theft or fraud.
As an alternative to getting your score directly from one of the bureaus, various monitoring companies allow you to get access to your score for free. Some of these services do charge a fee for additional monitoring services but are worth considering if you want to protect your credit score.
Here are some of the more popular online credit monitoring services available:
- Credit.com - Provides free credit scores, credit reports, and monitoring services to help you stay on top of your credit and protect yourself from identity theft and fraud.
- Credit Karma - A free credit monitoring service that offers credit scores, credit reports, credit monitoring alerts, and personalized recommendations for improving credit.
- Credit Sesame - A free credit monitoring service that provides access to credit scores, credit reports, and credit monitoring alerts. The service also offers personalized recommendations for improving credit and achieving financial goals.
- MyFICO - Provides access to credit scores and credit reports from all three major credit bureaus, as well as credit monitoring alerts and identity theft protection.
- FreeCreditScore.com - A credit monitoring service that provides access to credit scores and credit reports, credit monitoring alerts, and identity theft protection.
- Mint - A personal finance app that offers credit monitoring services, including credit scores, credit reports, and credit monitoring alerts, in addition to budgeting and financial tracking tools.
Banks, Lenders, Financial Platforms, and Credit Card Companies
Many banks, lenders, and credit card companies offer their customers (and sometimes non-customers) free credit scores. In recent years, these organizations have found that this service is a helpful way to enhance customer loyalty and attract new customers. By providing free access to credit scores, banks are helping their customers better understand their creditworthiness, which can lead to more responsible financial behavior, such as making timely payments and reducing credit card balances.
Here are some of the services and scores offered by various reputable lending and banking institutions across the U.S.
- American Express - Offers free access to FICO scores through their mobile app and website, plus credit monitoring alerts for key changes to a customer's credit report. You can even get personalized advice on how to improve your credit score.
- Bank of America - Provides free access to FICO scores through their online banking platform, plus credit monitoring alerts for critical changes to a customer's credit report. As with American Express, you can get advice on improving your credit score if there is room for improvement.
- Capital One - Offers free access to VantageScore credit scores through their mobile app and website and credit monitoring alerts for key changes to your credit report.
- Chase - Offers free access to VantageScore credit scores through their mobile app and website and also gives access to credit monitoring alerts for key changes to your credit report.
- Citi - Provides free access to FICO scores through their online banking platform and credit monitoring alerts for key changes to your score and credit report.
- Discover - Offers free access to FICO scores through their mobile app and website and provides you with credit monitoring alerts for key changes to your credit report.
- LendingTree - Offers personalized advice for improving credit scores and finding the best financial products for your needs plus provides free access to credit scores and credit monitoring alerts through their online platform.
- NAV Technologies - Offers personalized advice for improving credit scores and managing debt, free access to credit scores, and credit monitoring alerts through their mobile app and website.
- OneMain Financial - Provides free access to credit scores and credit monitoring alerts through their online platform and personalized advice for improving credit scores and finding the best loan products for your specific needs.
- SavvyMoney - Offers personalized advice for improving credit scores and managing debt and free access to credit scores and credit monitoring alerts through their online platform.
- Synchrony - Offers free access to VantageScore credit scores through their mobile app and website and sends credit monitoring alerts for key changes to your credit report. Consumers can also get personalized advice for improving credit scores.
- U.S. Bank - Provides free access to VantageScore credit scores through their online banking platform and offers credit monitoring alerts for key changes to your credit report.
- Wells Fargo - Provides free access to FICO scores through their mobile app and website and offers credit monitoring alerts for key changes to your credit report.
As you can see, it may seem a bit like a broken record on repeat, but there are many options out there to help you access your credit score, credit report, and even helpful financial advice. However, it is best to look for the best service for you. Some of these companies offering credit products to customers are looking at it as a sales opportunity for those in need of additional credit or financial services.
Sometimes, finances can get out of hand despite your efforts to maintain a budget and stay on top of your bills. Turning to a credit counseling service is often the next best step when it seems like the situation is worsening instead of improving. Credit counseling organizations are usually non-profit and have certified and trained counselors on staff to help with consumer credit, money and debt management, and budgeting.
Counselors will discuss your financial situation with you and help you strategize and develop the best possible personalized plan to solve your money problems and help you get back on track. Here are some examples of what credit counselors might do:
- Guide effectively managing your finances and debt obligations
- Assist in creating a customized budget tailored to your financial situation
- Facilitate access to your credit report and scores for your review and analysis
- Offer free educational resources, tools, and workshops to enhance your financial literacy
- Develop and implement a "debt management plan" aimed at reducing your outstanding debts
There are several places where you can find credit counselors:
- Non-profit credit counseling agencies - You can find non-profit credit counseling agencies such as InCharge Debt Solutions or Advantage Credit Counseling Service by searching online or by contacting the National Foundation for Credit Counseling (NFCC). The NFCC is a non-profit organization representing a network of accredited consumer credit counseling agencies across the United States. You can also work with Debt.org, a debt relief organization providing free financial counseling and education.
- Consumer Financial Protection Bureau (CFPB) - The CFPB provides a list of approved credit counseling agencies on its website. These agencies have been approved by the Department of Justice's U.S. Trustee Program to provide pre-bankruptcy counseling.
- Credit card companies - Some credit card companies offer credit counseling services to their customers.
- Employee assistance programs - Your employer may offer an employee assistance program (EAP) that provides credit counseling services.
- State and local government agencies - Some state and local government agencies offer credit counseling services to their residents.
Be sure to research and choose a reputable credit counseling agency. Look for agencies accredited by the NFCC or the Financial Counseling Association of America (FCAA) with a track record of success in helping people with their credit and debt issues.
Why Knowing Your Credit Score Is Important
The most important reason you should know your credit score is that it helps you understand your creditworthiness. If you are looking to finance a significant transaction, your creditworthiness is what lenders use to decide whether or not to approve you for their credit product and the type of terms to offer you. Regarding credit and consumer finance, it is better to be in the know than be surprised about how lenders or creditors might view you. Further, regularly checking your credit score and credit report can also help you catch and dispute errors that impact your score.
Understanding Your Credit Score
Let’s dive into your credit score itself to help you understand what it all means. And it all starts with understanding the two primary scoring models and their methodologies, FICO and VantageScore.
The FICO scoring system was developed in 1989 as the first broad-based consumer credit score. Until then, there was no standard system based on credit bureau data, making it a very complicated process with a lot of paperwork for those who wanted to get a credit card or loan. As such, Fair Isaac Corporation, now more commonly known as FICO, developed a credit scoring system that resulted in a consumer score ranging from 300 to 850. And scores were determined based on five weighted categories.
|Length of credit history||15%|
|Credit mix (diversification)||10%|
FICO then also takes the output of the score and classifies scores by groupings, as follows:
|Exceptional||800 to 850|
|Very Good||740 to 799|
|Good||670 to 739|
|Fair||580 to 669|
|Poor||300 to 579|
The VantageScore was created in 2006 in partnership by the three credit bureaus, Experian, Equifax, and TransUnion, to provide lenders with options on which scoring model to use. Though the score has gone through various iterations, the current version, VantageScore 4.0, uses the following six weighted categories to calculate your score.
|Depth of credit||20%|
And, similarly to FICO, those scores are then ranked into categories. The VantageScore categories look as follows:
|Superprime||781 to 850|
|Prime||661 to 780|
|Near prime||601 to 660|
|Subprime||300 to 600|
You have probably heard terms such as prime and subprime when listening to the state of the U.S. economy on the news. This is because prime and subprime lending can significantly impact the overall economy. During economic growth, prime lending tends to be more prevalent as borrowers have more stable employment and income. However, during economic downturns or recessions, subprime lending may become more common as borrowers with lower credit scores experience job loss or income reduction and may turn to borrowing to make ends meet. Lenders typically offer lower interest rates and better loan terms to prime borrowers or those with good or excellent credit. In contrast, subprime borrowers, those with fair or poor credit, may have to pay higher interest rates and may have more limited options when it comes to loan products.
It’s also important to remember that you may have many different credit scores because there are many different credit scoring models, and information on credit reports with the three credit bureaus can vary.
Improving Your Credit Score
The average credit score in the U.S. is 714, which falls nicely within the good range of the FICO scoring system and the prime range for VantageScore. Consumers with credit scores in these ranges tend to have access to lower interest rates, higher borrowing limits, and overall better-borrowing terms. If your credit score is lower than the average, or you want to improve it from fair to good, there are some things you should do.
Here are some of the most tried-and-true strategies to boost your credit score.
- Pay your bills on time, all the time. Failure to pay your bills on time each month, especially if you don’t make it up, can cause your score to plummet by as much as 180 points. Not only that but missing your payments regularly may result in your credit account being charged off to a collections agency.
- Stay on top of your credit file and history. This means that you should check your credit report for errors and file a dispute if you see something incorrect. All three bureaus (Experian, Equifax, and TransUnion) have established processes for filing credit report disputes.
- Keep your expenses and utilization under control. Your credit utilization compares how much you owe on your credit accounts to your credit limits. As a general guideline, you should keep your utilization at 30% or below to help not only protect your credit score but to improve it if it is lower than you want it to be. So, for example, if you have $7,000 available as a credit limit, you should keep your balance at $2,100 or below.
- Avoid opening too many credit accounts in a short period. Lenders want to see that you know how to use your credit responsibly. When you apply for too many loans or credit products in a short time, it can be a red flag. Generally speaking, try to wait at least six months between credit applications.
- Keep a healthy mix of credit. Creditors and lenders also like to see that you can responsibly manage different types of credits. A healthy mix may include a mortgage or rent payment, auto loan or personal loan, and two or three credit cards (try to keep your credit cards at four or fewer). But remember, all of those balances can add up, throwing that credit utilization sky-high. Plus, the more debt you have, the higher your debt-to-income ratio is, making it harder for you to take on more debt responsibly.
The best way to access your credit report is through one of the free programs offered by your bank or financial institution. If they don’t provide free access to your credit score and report, the next best course of action is to get your score from one of the three credit bureaus; Experian, Equifax, or TransUnion. In many ways, checking your credit score often (and for free) is part of our fiscal responsibility as borrowers. It helps us to understand our creditworthiness and can ensure we have not been the victim of fraud or identity theft. If your credit score is down and you are struggling to manage your finances, know that credit counseling services are available and may help you get on top of things and improve your score.