The first thing that you should know is that not every site that offers a free credit score check gives you one. There’s usually some marketing catch to the offer. So, beware of things that sound too easy.
Many people confuse the free credit score check with a free credit report. So that we can be clear, let’s see why you can get a free credit report but you usually cannot check your credit score for free.
When the 3 government appointed bureaus collect information about you, all they do is compile it into a report. They will collect all kinds of information – it includes the all the loans or new lines of credit, how long you have had them, how you have been paying them off and so on. In other words, they compare your debt to how you pay it off and then come up with a fairly accurate picture of how risky you are to a lender. This report is what is called a credit report, and you’re allowed a free one each year from each credit bureau. Lenders who want to look up your credit history will have to pay for it though. The bureaus usually charge them a flat fee for a given number of credit reports.
Now, let’s talk about the credit score
It is a number that is calculated using any of the two dozen popular formulas used. Each credit bureau is allowed to use whichever formula they think is best. This number is treated as intellectual property, and it is not free. Thus, you usually have to pay a fee to get it. The higher your score is towards a top score of 850, the better for you in terms of how lenders will treat you.
You can get it from 1, 2 or all 3 credit bureaus, and it can vary since the bureaus are free to use information from different creditors. That means that if you want to borrow money from a lender and want to be sure that your credit score will look good to them, you should ask them which bureau they use. This way, you can pull that particular credit score that they will be looking at. The 3 bureaus all charge differently, but combined, you will usually not pay more than $50 every year to get all 3 scores.
How is a free credit score check different from getting a free credit report?
As we have already seen, you can get a free credit report but you cannot check your credit score for free. The government allows you to get one free credit report a year from each of the 3 bureaus. You are encouraged to look at these credit reports so that you can keep track of how well you are managing your debt. If you have not been doing so well, it is reflected on the report and there are prescribed ways with which you can improve both your credit report and your credit score.
You are also encouraged to look at your credit report because there are numerous mistakes in many reports that can negatively impact your credit score. It is understandable that these mistakes happen if you ate into account the way the information is compiled. Each creditor in the country is mandated to transmit information on who has applied for credit, who has received it and who is paying back what they owe, how much and how promptly.
The mistakes could happen right from the offices of the creditors all the way to when they are input at the credit at the credit bureaus. Remember, if there are errors on your report, you are able to dispute them for removal.
It is common, for example, for payments to be missed entirely. Juxtaposition errors are also common. 2 or 3 of these errors could give you a very poor credit record. When you check regularly, you are able to catch these errors and you can report them and have them corrected right away.
Does getting a free credit score check affect your credit in any way?
Again, there is nothing like a free credit score check, but it is important to talk about whether checking your credit score affects your credit rating. Contrary to popular belief, checking either your credit score or your credit report does not affect your credit in any way. This myth makes a lot of people reluctant to check their credit position which as we have seen, may cost you in the long term.
What will affect your credit rating is if someone else makes a check. It is assumed that any other person that is looking at your credit report or credit score wants to know how you have paid your debts in the past because you have approached them for a new line of credit.
That is why you are advised, if you already have bad credit not to take out any more inquiries, even if the lenders deny you the new line of credit they are still recorded.
If you get your credit score and it is high, you can assume that your credit report is in good shape as well. However, it is diligent to look at both and because it costs so little, you should go ahead and know what is in your credit report as well as what your credit score is. And remember, the fact that you have a healthy credit score does not cancel out the fact that your credit report can have anomalies, even positive ones that may be helping your credit score look healthier than it actually is.
In what real life situations do you need only a free credit score check?
Your credit score will not just affect your ability to take out new loans or credit cards. Employers routinely look at credit scores so that they can see how financially responsible you have been in the past. Landlords do the same as well because they want to be sure that they are lending to someone who has a history of honoring their financial obligations.