To many, a credit score is a mysterious and frightening thing. Even to those familiar with them, they can be frustrating. But with simple effort over time, one can bring one's credit score up even from the pits. To make it simpler, I'll outline it step by step in individual articles. Here is the first one:
There are many reporting companies who are willing to take your money in order to deliver you your credit information. But before you do that, you can (and should) get your free credit report directly from each of the three main agencies, Experian, Equifax, and TransUnion. These reports are very useful, but they don't include your numerical (FICO) credit score.
What is a FICO score anyway?
Your FICO score is your at-a-glance way of measuring how good your credit rating is.
The FICO score range is 300 to 850 with the higher score being better. Average Americans have a credit score in the 600's -700's. When your score is higher, you'll get better offers from credit cards and loan companies with lower interest rates, so it's really worth improving yours!
Here is what goes into your FICO credit score:
- Payment history (35% of the FICO score)
- Debt/amounts owed (30%)
- Age of credit history (15%)
- New credit/inquiries (10%)
- Mix of accounts/types of credit (10%)
To get your free credit report without the FICO, go to www.annualcreditreport.com - this is the official site for the free reports from the credit agencies. I'll go more into what is contained in your full credit report in another article.
Shopping to get your FICO credit score
Sometimes you can get access to your FICO credit scores for one or more of the credit agencies via a credit card company that you already do business with. Consider taking that step as you can sometimes ask for lower prices for their credit service and actually get it. That will take a phone call and some polite discussion with your friendly customer service representatives. If they say no, you haven't lost anything, but if they say yes then be sure to thank them.
Some credit card companies offer access to your FICO credit score for free as part of their services. Log in to your account on their website and look for an option to view your FICO score. There are also free services out there such as www.creditkarma.com which can be a good resource for credit information.
Look for credit reports that contain all three credit agencies
There are three main credit agencies that report your credit information, and they all can have different information. When you first start out improving your credit, it's a good idea to check your FICO credit score more than once over the year for each credit agency. If you can't get your FICO credit score for free, you should get the most for your money and find a credit report company which will give your FICO score from all three of the agencies. For a reminder, these agencies are: Experian, Equifax, and TransUnion.
Some credit reporting companies may give you your credit information, but will not also give you your FICO, so make certain to find a credit reporting company that will deliver FICO scores from all three agencies as well. After all, you can get the other information for free once a year through www.annualcreditreport.com.
Consider your financial situation and what you can afford
Shopping for pricing is a no-brainer. However, you will also want to consider whether you want to pay for a one-time picture now to compare with another paid one-time picture later, or whether you want to purchase a subscription to a credit service in order to watch how your credit changes from month to month. The cost of a credit report can change from company to company.
There is a lot involved in improving your credit score, but it doesn't have to be complicated. In these articles, I am going to give you advice using what I learned by trial and error and by reading many finance articles. Remember that time and patience are an integral part of improving your credit.