You can check your credit report for free once per year at www.annualcreditreport.com, and we urge everyone to do so. But checking your report isn’t the same as checking your score, and that leaves some questions. Should you check your credit score? How often? How and which score to check?
For starters, it’s important to check your credit score regularly because that’s how lenders evaluate your creditworthiness. Think of it like this; your credit report is your homework, and your credit score is your grade.
You might pull your own credit reports, check them for errors, and ensure there are no signs of identity theft or fraud. But simply looking at your credit report might not give you any idea of whether your credit is “good” or not. We always urge people to make sure that their credit reports are accurate and reflect positively on them—the score is how you know your credit is a positive reflection on you.
The catch with checking your credit score is that it isn’t free. Depending on where you live and which score you check, you’ll likely have to pay to see that information.
This is where it’s important to know the differences between FICO and VantageScores. FICO scores are the standard that most lenders use to evaluate your creditworthiness. If you want to know what scores lenders will see when you apply for a loan, then you want to see your FICO score. But they’re not cheap—currently it costs around $20 per score, so getting your score for all three credit bureaus (TransUnion, Equifax, and Experian) would cost around $60.
VantageScores are an alternative designed by the bureaus themselves. They cost about half of what a FICO score costs. When you go to www.annualcreditreport.com and get a free credit report, the bureaus will offer to sell you your score as well—this is a VantageScore they’re offering. And we usually don’t recommend people pay the extra for a score when getting their free annual report. This is nothing against VantageScore—it's just that checking your report and score aren’t synonymous; usually you only want the report, and should only pay for the score when the time is right.
If you’re simply trying to ensure your credit report is accurate, stick with the report and don’t worry about the score. If you’re investigating possible identity theft, or recovering after being a victim, you should also stick to the report and don’t pay for a score. If accuracy is what you’re trying to make sure, don’t waste money on a score.
But if you’ve already verified that your report is accurate and up to date, and you want to evaluate how good your credit really is, you can get a score to see where you stand. It’s important to do this check well in advance of taking out a major loan. At least a few months before filling out that loan application, check your score, and if it’s not as good as it needs to be, take steps to improve your score—pay off overdue charges, pay down balances, make sure everything is accurate and up to date. It may take the creditors a few billing cycles to report the new balances and payments to the bureaus, so you need as much advance time as you can get to see how much your score improves.
See our article on “5 Actions You Can Take to Improve Your Credit Score” for more advice on improving scores over time.
Another thing scores have a big impact on is your home or auto insurance rates; this varies by state guidelines depending on where you live. So in addition to borrowing or working to improve your credit, you might want to buy a score in advance of changing insurance companies or applying for a new insurance policy. A few states have taken pre-emptive measures to guard consumers from being affected by credit-based insurance scores.
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VantageScores are cheaper, so you’ll probably be tempted to check those out first. They’re certainly worth checking if you want to see whether your credit is “good”, how much it has improved, etc., but they aren’t as useful to check before borrowing. FICO claims their score is used by 90% of top lenders, so if you’re preparing to get a loan, you probably want to see the same score your lenders see, which is your FICO score.
Here’s where things can get tricky. If you can genuinely get free access to your credit score, then there’s no reason not to check it. But a lot of “free” credit reports aren’t free at all, so you have to be careful.
Some credit card lenders offer a free report & score to their customers. This is the best way to get a free score. Your lenders are buying it on your behalf and giving it to you as a perk of being their customer. No tricks or gimmicks, just a free score. See CFPB’s list of companies that offer free credit scores to their customers.
Then there are some services we talked about in our article “The Real Path to a Free Credit Score”, including Quizzle, CreditKarma, and CreditSesame. These services give you a free VantageScore in exchange for signing up and sharing data with them. They use your info to deliver targeted ads to you. If you don’t have any privacy concerns with this kind of advertising model, then this is a good way to get a free credit score.
Another model for free credit scores isn’t really free. Some companies offer a free credit score as an incentive to sign up for a monthly credit monitoring service. You do get your score for free up front, but quickly you’ll start seeing monthly charges that can be hard to cancel. There are good reasons for some people to buy credit monitoring, but we want people to enter into this agreement willingly and with clear eyes, not tricked into it by the offer of a free credit score.
Finally, law entitles you to a free credit report & score if you are denied credit. We wrote about this law shortly after the policy was changed in our post “Get a Free Credit Score if You Are Denied for Credit”.
If you’re not sure you’ll be able to make sense of your credit report & score, you can get that through a Credit Report Review, and have a certified financial coach review it with you. That’s the best option if you don’t want to have to do any heavy lifting.
If you’ve got a good handle on how credit works and just want to see your score ahead of applying for a loan, stick with myFICO.com, or see if your credit card company offers a free FICO score.
And if you want the less expensive VantageScore, VantageScore.com is the place to start.
Finally, if you plan to get a free score through a web site membership or subscription, do your homework first and make sure you are doing business with a trustworthy company who won’t misuse your personal data or sign you up for a subscription charge without your explicit consent.
Remember, you don’t have to navigate these waters alone. If you need help understanding your credit, paying down debt, avoiding foreclosure, etc., then contact us today to talk to a certified financial counselor.
