What is a Credit Score?
April 19, 2017
Editorial Disclaimer: Information in these articles is brought to you by CreditSoup. Banks, issuers, and credit card companies mentioned in the articles do not endorse or guarantee, and are not responsible for, the contents of the articles.
If aliens judged us by our commercials, they’d probably assume everyone were interested in pharmaceuticals, luxury cars, and credit scores. Many advertisements urge viewers to know their credit rating by heart.
Is this really that important to know, though?
Yes and no.
The planet won’t stop turning if you can’t quote your credit score. That said, you could be in for an unpleasant experience if you apply for a line of credit only to discover your score is much lower than you expected.
You deserve a truly free credit score when you need it, and you deserve it from a legitimate service that won’t pull a bait-and-switch maneuver. Otherwise, your “free” credit score could come with a side of fees for services you never wanted or needed.
How to Tell the Good From the Bad
As a rule of thumb, the best free credit score sources will always be transparent.
For instance, CreditSoup has a site wide advertiser disclosure that lets people know exactly where we stand as an independent, advertising-supported comparison service. Any offers you see on our website are from advertisers who compensate us for their presence. Knowing this ahead of time should help put you at ease — our information isn't designed to mislead visitors.
Another key indicator of a solid service is a free credit score that doesn’t affect your credit score. It also shouldn't require you to first sign up for any sort of credit card or similar offer. Far too many offers have hidden catches.
Are you interested in one that's 100 percent free? Check out our VantageScore 3.0 credit score through TransUnion. It won't affect your credit score or necessitate any sort of purchase.
What to Expect From a Credit Score
As part of the process of obtaining a free credit score, you can expect to answer three or four questions regarding your personal credit history. These questions will vary depending on the service you choose. After submitting your answers, you'll likely be redirected to a dashboard where you can verify your answers and finally see your score.
It should be a streamlined, efficient experience that takes only a few minutes. Companies will sometimes give you the option to pull a full credit report for a minimal fee — we let users purchase a full TransUnion credit report for $1. That sort of report can be useful, but it should never be a requirement to receive your free score. If a company is demanding you pay a small fee to get your score, you'd be wise to run far, far away.
When to Check Your Credit Score
It isn’t necessary to keep an eye on your credit score every waking moment — your score will naturally ebb and flow over time. We recommend pulling your score once a month, which will give you a clear idea of where you stand over time. This will allow you to chart growth or setbacks and see how your actions affect your score.
Before taking out a home loan, an auto loan, a business loan, a personal loan, a student loan, a line of credit, or a credit card be sure to recheck your score. Why? Knowing your score can help you search for any card or line of credit that's best for you. Similarly, the higher your score is, the better your loan or line of credit rates, amounts, and terms are likely to be. Having an idea of where your score averages before talking with a lender can help you set expectations.
Debunking the Biggest Credit Score Myth
Many consumers have misconceptions related to credit scores. The most common mistake is the idea that pulling your credit score will negatively affect it.
Whether you request a VantageScore or FICO score, your credit score should be unaffected if it's a soft inquiry. Hard inquiries — typically by a third party when you're shopping for credit — are the only thing that can negatively impact your score.
If you apply for a student loan, for example, your lender will ask an entity like Experian or TransUnion to pull your score. A note about this inquiry will be added to your report under the category “new credit.” New credit plays a small role in your overall score, and it can drop your score as many as five points. Over time, these hard inquiries are removed from your credit report. If you don’t make too many credit inquiries in a given year, you shouldn't see a major change in your score.
Soft inquiries are a different matter. Have you ever received a letter in the mail saying you were preapproved for a line of credit? That lender made a promotional inquiry and discovered you were a good credit risk, though that inquiry didn't affect your score. If you make a similar personal inquiry, your score remains unchanged.
Is it good to know your credit score? Absolutely. However, being hassled by lenders or fooled by a scam is no good. Be sure you’re receiving a genuinely free credit score by working with a reputable company.