Before you make an application for a:
- new mortgage,
- personal loan, or
- credit card…
…knowing your credit rating gives you an insight into which products you could qualify for as well as which interest rates you could expect.
Some people believe checking their credit score will harm their credit, but rest assured that it doesn’t. Even if you aren’t making a credit application, it’s, therefore, a good idea to check your score regularly. Here’s how you can check your credit rating and save thousands!
Credit Rating: Learn How To Check Your Credit Score & Save Thousands!!!
Carrying out a check on your credit score is a way of improving your credit. Should you spot your score dipping, you can sign up for alerts. It can show you possible errors or potential fraud on your report. If you check your score every month, you can catch potential issues at an early stage and resolve them before they are out of hand. Read below to find out more about your credit rating.
Your Credit Score – What Is It?
Although most people are aware that they have a credit score, they don’t always know what it is. Essentially, your credit score is a number, usually between 300 and 850, that is obtained by analyzing your credit file. The number lets lenders know how much of a credit risk you might be, and how able you are to repay a loan.
There are two scoring models used by lenders in America – FICO, and VantageScore. However, FICO is the preferred model of more than 90% of lenders. A score of 670 or higher is considered to be good with a score of 800 or more being considered to be exceptional.
While both models have similarities, there are differences in the calculations.
- 35% weighting to payment history
- 30% weighting to the amounts already owed
- 15% weighting is given to the length of time you’ve had credit
- 10% weighting is given equally to how often you’re applying for and opening new accounts and the range of credit products you’ve got
Meanwhile, VantageScore pays the most attention to your payment history, the duration and type of credit you have, and the percentage of your credit limit you’ve used. It gives less weight to your total debt, your available credit, and any recent credit inquiries.
The best way to get a clear picture of what lenders see when they run their own checks is to check both VantageScore and FICO credit scores.
What Affects My Credit Score?
There are many misconceptions about what will impact your credit score.
Things NOT affecting your score:
- home equity,
- your income,
- your net worth,
- the balance in your retirement account
When your credit score is calculated, these things are not taken into consideration. Some other factors that won’t be taken into account include religion, race, gender, nationality, age, marital status, education, political affiliation, or job title. Not even your employment history, employer, total assets, or where you’re living is going to have an effect on your credit rating.
Credit Reports And Credit Scores – Is There A Difference?
Credit scores and credit reports are two different things. Your credit report takes a holistic view of your credit, showing details about your current financial situation and credit activity.
These reports outline:
- personal data,
- your credit accounts,
- public records, and
- inquiries into credit.
Meanwhile, your credit score is a proxy for your credit report’s health.
While you could review your three primary credit reports from:
This can be time-consuming. Therefore, checking your credit score is a quicker and simpler way to get a clearer picture.
Checking Your Credit Score For Free
Most issuers of credit cards provide access to credit scores for free to cardholders. This makes it a breeze to check your score. In under 5 minutes, you can log into the website of your card issuer and navigate to the section about credit scores. You’ll usually see a dashboard that lists your score as well as the factors that are influencing it. If you don’t have a credit card, you can use other free resources like Creditwise, Chase Credit Journey, or Discover Credit Scorecard to learn more.
Knowing Your Credit Rating Is Helpful: In Conclusion
Once you know your credit score, you’ll have a clearer idea about which type of cards and lines of credit you may be offered in the future. This will help you to make the right borrowing decisions and save money in the long-run.
Have you checked on your credit rating yet?
AUTHOR LaTia Longuemire
My name is LaTia Longuemire. I enjoy writing, singing, and cooking in my spare time. My passion is helping others. At this stage in my lifetime, I'm primarily focused on my children. They are everything that keeps my world spinning.