Americans are entitled to a free credit report each year from the three major credit bureaus. Some financial services providers will provide your credit score for free as well.
Your credit score aims to measure how responsible you are with money, and it can have tangible implications for your ability to get a loan and at what interest rate. Borrowers with a positive repayment history and high credit score are typically viewed as low-risk and may have access to favorable rates and even credit card perks and rewards.
To know where you stand, you’ll want to keep an eye on your credit score and full credit history. Let’s go over how you can access this information, as well as what you’ll want to look out for.
The Low-Down on Credit Reports
By law, you’re entitled to one free credit report from each of the three major credit bureaus, Experian®, Equifax® and TransUnion®, every year. You can access these reports from AnnualCreditReport.com.
The information in your credit report—including your payment history, any outstanding balances, the length of your credit history, the mix of account types you have and any new credit inquiries—ultimately determines your credit score.
New credit checks are broken down into two categories, soft inquiries and hard inquiries.1 A hard inquiry typically happens when you apply for a loan or credit card, and it can cost you some credit score points. Pulling your own credit report triggers a soft inquiry, which does not impact your score.
Credit Scores and Where To Find Them
The credit score commonly used by lenders is formally called a FICO Score, and it’s presented as a three-digit number on a scale from 300 to 850. You can get yours for free from Experian, or you can purchase it from all three credit bureaus at myFICO.com. You might even get free FICO Score updates from your bank.
Several companies, such as credit card providers, offer the VantageScore for free as well. The VantageScore considers similar factors as the FICO Score, such as your payment history and credit utilization, in its calculation.
The scoring models used by creditors to measure creditworthiness may vary, so before applying for credit, you can always ask which type of score the company will review.
The Potential Benefits of Credit Monitoring
You can elect to use credit monitoring services, which keep tabs on your reports and alert you to changes, usually for a fee. Certain financial service companies offer credit monitoring with their products as well.
While not necessary for everyone, these services may offer some benefits. First, you can use the credit report and score updates to track improvement, dips or irregularities.
Credit alerts can also help you catch and report identity theft. In 2023 alone, the Federal Trade Commission received 426,000 reports of credit card-related fraud.2 Unauthorized purchases or fraudulent accounts can potentially wreak havoc on a borrower’s credit.
Keeping Your Credit in Good Standing
If you notice inaccurate records on your credit report, you have a right to dispute them. The Fair Credit Reporting Act (FCRA) states that credit bureaus must research disputes (unless frivolous) and remove information that cannot be properly verified.3 Each credit bureau has instructions for how you can file a dispute on its website.
Lastly, know that a poor credit history does not have to follow you around forever. Missed payments are generally removed from your report after seven years, and bankruptcy in up to 10 years, depending on the Chapter under which you file.4 Moreover, as time passes, your new positive history will start to have more of an effect on your score than your past negative history.
The Bottom Line
Credit is an important part of our financial lives. Your score can impact the types of lending opportunities for which you qualify, and a high score may even open the door for lower interest rates, among other perks. Keeping an eye on your credit reports, either on your own or through a monitoring service, is a way to make sure you’re in good shape.
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