you know that you can check credit score to help improve your credit? In fact, you can get a lot of information, even when you get a free credit report on yourself. In addition, checking your score regularly can help you catch frauds and get started resolving any issues that may arise. But before you get started on browsing your credit score, you need to know the basics.
- What Is Your Credit Score?
Your credit score consists of a number between 300 and 850 that summarizes your credit condition. These use different data from your credit reports, such as past status, current status, length of history, and payment records. In short, it is used to tell lenders your risk potential and your history with repaying loans.
Additionally, your credit score will come with a rating based on the examined model and which report it came from. The ratings generally range from bad or poor to excellent or exceptional. Your rating is based on the number assigned as your current score. Each credit bureau will offer its own chart so you can understand your rating.
- Are There Multiple Models?
The two main credit models are FICO and VantageScore. That said, FICO is the primary model used in more than 90 percent of lending transactions. These models are similar in that they both provide a three-digit number between 300 and 850 and rely predominantly on your repayment history. The key difference is in how other credit factors are weighed.
- How Are They Calculated?
As mentioned, the two models are calculated differently. For example, your FICO credit score uses your payment history, amounts owed, credit history duration, new credit, and credit mix to create your score. On the other hand, VantageScore uses your payment history, duration of credit, total debts, and available credit.
- Which Score Is Better To Check?
Most experts will recommend checking both of these scores to understand what lenders see. You don’t know which credit score your lenders will pull, so it’s good to know how they are both doing. Plus, it is free to check your credit score, which means you only benefit by checking it.
- What Has no Impact on Your Score?
There are a lot of misconceptions about the factors that do and don’t impact your score. That leaves people focusing on things that don’t really matter. The most common thing that people worry about that doesn’t matter is total wealth. Net worth, home equity, retirement accounts, income, or anything else that implies your total wealth doesn’t impact your score.
- What’s a Score Vs. a Report?
Credit reports and scores are not the same. Your report paints your entire current and past credit status. These will contain critical and confidential information, such as your personal details, credit accounts, public records, and inquiries about your credit. Additionally, there are only three credit bureaus that issue these.
Meanwhile, your score is basically a summary of your report and current credit condition. This serves as a quick alternative to pulling and reviewing all of your reports.
- Are There Free Ways To Check Your Score?
Generally, if you have a credit card, you can see your score through them quickly and for free. Additionally, many banks are now offering the ability to check your score for free when you have their banking apps.
- How Do Credit Scores Impact Your Life?
The higher your score is, the more credit you can take out. Additionally, people with excellent credit scores will qualify for better credit cards that offer nice rewards.
Your credit score can be an important tool if you know how to use it correctly. Using this advice can help you understand and improve your credit score.