You might be thinking why it is even necessary to answer this question but believe it or not, your credit score is something that indirectly influences your major financial decisions. If you have a good score, then you can avail all the benefits such as easy loan approvals with lower interest rates, lower your auto insurance premiums, get qualified for a new credit card with a higher limit etc. Knowing your credit score can fetch you all these benefits & more.
However, it can be a bit baffling and sometimes expensive to get access to your credit score. It would be a piece of cake if you have a basic understanding of what a credit score is and where you can check your credit score for free.
What is a credit score?
A credit score or FICO score is a numerical expression (ranging between 300 and 850) that defines your creditworthiness, and this is the reason for most lenders to ask for your credit score.
Most Americans fall into the category “good” with an average of 700 as the credit score. Let’s understand more about the credit score numbers:
Credit Score Range
- 550 & Below – Bad
- 550 to 649 – Poor
- 650 to 699 – Fair
- 700 to 749 – Good
- 750 & Above – Excellent
There are a few things you need to consider while checking your credit score, such as:
- Is it calculated using a FICO formula? (as not all credit scores are calculated using FICO formula)
- What credit bureau data is used to calculate your credit score?
- Is it free or charges a fee?
There are three main credit reporting agencies, namely Experian, Equifax and TransUnion and each of them uses different data of yours to generate the credit score. Although, the difference would be significantly small in terms of the final credit score and in case if you have time, you can try checking all three.
It can be a difficult thing to predict which source the lender would use to evaluate your credit score before offering you a loan.
How to check your credit score at no cost?
Some of the credit score providers update their score weekly, monthly or once in 3 months. It is recommended to check the latest score accordingly to get the most accurate results. Credit Karma is one of the source providers where the credit scores are updated on a weekly basis. So, if you’re planning to apply for a major loan, then check the most recently updated credit score to know your chances of getting approved for the loan.
Following are the providers to check your credit score for free(or for a small amount):
- Credit Karma
- Credit Sesame
- Capital One
- American Express
- Bank of America
Why your FICO score is so important?
Your FICO score plays a vital role in defining your loan affordability, the credit limit on new credit cards, interest rates on mortgage and auto loans, and even your job. In general, your credit score affects all your credit and lending decisions, which implies that you need to check your credit score before you take a major financial decision.
If you check your credit score often, then you will be aware of where you stand financially. It would give you a fair idea of whether you’re ready to apply for a loan. Checking your credit score would give you a chance to improve your credit score and get approved for a loan easily. Now that you know how important it is, let’s look at the sources where you can check your credit score for free.
Some sources even offer a free credit report along with your credit score. A credit report would give you a better insight into the factors that are influencing your credit score. Once you start analyzing your credit report, you can look for ways to improve your credit score before you take that big financial jump.
Checking your credit score often can keep you updated with your financial health and it is recommended to check your credit score and report at least once in 12 months. If you’re planning to apply for new credit or loan, then you should check it more often from one of the free sources listed above.