Now that you understand the importance of tracking your credit score, you’re probably wondering how to do it. There are several no-cost options available including online service providers, financial institutions, non-profit consultants, and mortgage lenders.
Online Service Providers
Some online services provide you with free credit scores in exchange for being able to show you offers from lenders and other retailers. If you apply for credit or purchase something through an ad on their site, they get paid by the advertiser. This gives them the ability to earn money without charging you to see your score.
Some of these companies will provide you with copies of both your credit report and your credit score and will even help you file a dispute if you find a problem. When using these sites, you’ll get the information you need without spending money, and it’s possible that you can find a great deal that’s been tailored to meet your specific needs. For many people, this is a win-win. Below are two services with proven reputations.
- Credit Sesame
- Credit Karma
Financial Institutions
Thanks to the FICO® Score Open Access Program, more than 170 financial institutions now have the ability to provide their customers with free access to their FICO score. This means that many major credit card companies, banks, and other financial websites will provide you with ongoing access to your score as long as you maintain an active account with them. If one of the above services isn’t convenient then you could try logging into your lender’s website and search to see if you can find access, or you could check your monthly statement to see if they explain where they provide credit score access. Not all lenders provide this service, but it’s worth researching in case your lender does.
Non-Profit Consultants & Mortgage Lenders
Non-profit credit counselors and HUD housing consultants can also provide you with your current credit score and credit reports for free. Mortgage lenders are also required to provide you with all the scores they use to make your lending decision.
Questions to Ask Before Checking Your Credit Score
When looking at your options for obtaining a free credit score, there are some important questions you’ll need to ask.
1. Which Credit Score is Being Used?
The two most popular credit scores are FICO and VantageScore. FICO has been around since 1989 and was the industry standard for many years. Recently, FICO’s dominance has been challenged by relative newcomer VantageScore, which is the product of a collaboration from the three major credit reporting agencies. While both FICO and VantageScore use the same numerical range, and are often similar, they’re not the same. Since it’s almost impossible to know which score a lender will use, the specifics of which score you monitor don’t really matter that much. Still, you’ll want to know which score you’re looking at so you can make sure you’re checking the same one each time.
2. Is This a Soft or Hard Inquiry?
A “hard” inquiry, or “hard pull,” occurs when a lender pulls your credit report for the purposes of making a lending decision. You usually must give authorization for them to do so. Hard inquiries can negatively impact your credit score, at least temporarily.
If you apply for multiple credit cards in a short time frame, lenders could see this as a red flag. However, agencies are aware that people often rate-shop before choosing a lender for a major purchase. For this reason, they usually disregard auto, mortgage, or student loan inquiries made in the 30 days prior to scoring. If you make your final decision within 30 days, the inquiries shouldn’t have a major impact. A credit score drop from a hard inquiry will also likely rebound after a short time as long as you don’t apply for any more credit.
“Soft” inquiries, or “soft pulls,” are usually used when you check your own credit score, when employers run a background check, and when credit card companies assess your score before sending you an unsolicited credit card offer. Most credit score reporting and monitoring services use a soft check, which won’t impact your report or score. Before you sign up for a service, however, you’ll want to confirm what kind of check they use.
3. Is the Service Really Free?
Some sites claim to be free, but only offer limited access and then require you to pay for the important stuff. Other “free” offers are actually trials for ongoing paid monitoring services. The trial periods are sometimes as short as two weeks, and if you don’t cancel on time, you’ll find yourself stuck with a bill. If a company offers something for free but requires you to enter a credit card, think twice. Below are two free credit score services to consider:
- Credit Sesame
- Credit Karma
Knowledge is Power: Check Your Credit Score Today
Now that you understand the importance of checking your credit report and your options for doing so, it’s time to take action. Many people avoid looking up their scores because they’re afraid of what they’ll find, but burying your head in the sand won’t make it go away. Whether you think you have a great credit score, or you’re concerned about where you’re at, now is the time to find out for sure.
Building wealth is about making smart risk vs. reward decisions. The risk of not checking and not knowing clearly outweighs the cost of checking your credit score, given that it’s free. There’s really no reason not to check.
Knowledge is power, and your financial future starts by knowing where you stand. Contact me for a free 20 minute consultation if you have questions about your Credit Score or Credit Report. https://lindalingo.com