Today I will start by explaining a little bit about your Credit Score and “What’s a good Credit Score”. Then I will explain how to find your Credit Score online for free. Finally I will provide a few easy steps you can take, on your own, to improve your Credit Score.
- What’s a FICO Score
- What’s a Good Credit Score
- How to Check your FICO Score
- Online Free Credit Scores
Several years ago, when I was doing research for buying our first home. I was always asked if I knew my FICO Credit Score range. The score I had from a free credit score website, wasn’t enough. So I wanted to find out more about credit scores and what a FICO score is. I knew some of the basics about Credit Scores but I wanted to know even more than that.
Well, I still might not be an expert, but learning a lot about credit scores and what a good credit score scale looks like, has driven me to share what I know with you. Here are some “Facts you Need to Know” about What is a Good Credit Score…
What is a FICO Score?
“Fair Isaac Corporation” also known as FICO, is the credit score used by almost 90% of the top lenders and banks.
Our FICO score is used in making credit-related decisions every day. Institutions like banks, mortgage lenders and Credit Card companies are just a few that will only use FICO Scores. They use the information on your credit report to assess the possibility that you will become more than 90 days late on the payment of a loan.
Unfortunately, credit scores have become more of a label than a tool. From loans and credit card approvals to interest rates and employment, our FICO score plays a big part in our lives.
Fact – Some Insurance companies might use your FICO score to calculate the rates and approval of your policy.
Factors Used to Determine FICO Scores
Here are the most common factors used to calculate your FICO score. I also added a brief description and the weight for each of the factors.
Amount of Debt 30% – How much you owe banks and lenders. This includes Student Loans, Credit Card balances, Mortgages and other types of debt. Having too much debt is a sign you might be spending more than you can pay back.
Fact – Check your credit report for old Fully Paid accounts that have not fallen off. Auto loans are notoriously known to stay on your report even after you loan has ended.
Payment History 35% – Forgetting to pay your bills on time or even not paying them at all. One of the biggest destroyers of a Credit Score is Not paying your bills. Even if you are disputing a charge on a Credit Card, you should still make the minimum payment on time.
Length of Credit History 15% – Age of your accounts, including the age of your oldest account. How long your accounts have been open for will determine this factor.
Fact- Keeping older accounts open and active, can help improve your FICO score rather than opening new accounts.
New Credit 10% – How many Recent credit accounts you have open. Opening multiple new credit accounts, in a short amount of time, can be seen as a risk in the “eyes” of lenders.
Credit Mix 10% – The variety of open credit accounts you have on your report are taken into consideration here. Mortgages, credit cards and retail accounts are a few examples of different types of credit accounts.
What’s a Good Credit Score?
The first thing you need to realize is there’s more than one credit score type. You see a lot of online sites offering free services to provide your credit score for free. You need to know that sometimes that isn’t your true credit score, otherwise known as your FICO score.
Fact – Your FICO credit score can be as much as 100 points different than the score you get from a free online site. That’s right, a lot of these are called “educational” scores or something similar.
The Free Online Credit Score will give you a guideline and general idea how your real credit score might be. Banks and lenders will only use your actual FICO Score for loan approvals and to calculate APR.
Your FICO score can range from 300-850, according to VantageScore 3.0. Consider improving your score if it falls below 650. You can even use some improvement with scores above 700. But with a score in the 750-850 range, you can virtually walk into most retail shops, sign a form and walk out with thousands of dollars’ worth of merchandise.
How to Check your FICO Score for FREE
Here are a few ways to check your FICO Score online. For a fully detailed review and more complete list of ways to check your FICO score online visit (…..)
Credit Card Companies – Some Credit Card companies offer their customers a chance to check their FICO score for free. Either the issuing bank or card company may provide you with your FICO Score for free. Calling the number located on the back of the card should do the trick. Ask your issuer for more details and take advantage of the report if it’s provided.
Banks & Lenders – When applying for most types of loans, the lender will have access to your FICO score. They shouldn’t have a problem providing you with your FICO score. Some banks even provide their checking account holders free access to their FICO score.
Credit Union – If you’re a member of a Credit Union, you might be in luck. Since you’re most likely paying a membership fee to be a part of the Credit Union, you might not consider this method a Free FICO score. Check if access to your FICO score is one of the benefits they provide.
Consumer Credit Counselors – According to Consumer Reports, credit counselors entitle their clients a copy of their FICO scores for free. Providing clients, a copy of their report, counselors believe it will help them improve their financial situation. Not considered a free FICO score, but worth mentioning in case you’re already working with a Credit Counseling service.
You’ll find a more detailed and complete list of ways to get your FICO score here (….)
Online Free Credit Scores
Using a free online Credit Score provides you with an “educational” score. It can be a quick alternative to knowing how good your credit score might be. Keep in mind that this score can be as much as 100 points different than your FICO score.
But you will be able to check it more often and can use it to help improve your current credit situation. Just don’t rely on it for getting a loan or applying for a Credit Card.
