Free Credit Score

The credit score has an impact on everything, from renting a house, to the limits on credit cards, to the interest rates offered on loans like mortgage, etc. Lenders will find you more creditworthy if your credit score is high. Contrarily, they will consider a borrower to be riskier if their credit score is low and subsequently charge a higher interest rate.

Checking and Calculation of the Credit Score

Your credit score will differ according to which of the three main credit bureaus you are using to check it. For simplification of such confusion, the three major credit bureaus, i.e., Experian, Equifax, and TransUnion came together and created the VantageScore.

There are several reasons why individuals need to verify their credit score. First, it helps you understand your creditworthiness and your financial standing. The credit score affects the interest rate that you will get on different loans, including auto loans, mortgage loans, and personal loans, etc. Secondly, when you check your credit score on a regularly basis, you can stay alert of any fraudulent activity or errors that may be occurring in your name. For instance, if you see an unexpected drop in your credit score, you can pull up and review your complete credit report in detail.

How to Build or Improve your Credit?

If you are just starting out and need to build your credit, you may begin the process by starting small, like putting a few bills in your name or taking a student credit card. Ensure that you make timely payments of each and every bill and never miss the due date. You should also get into the habit of tracking your credit score on a monthly basis.

For those who already have adequate credit, but need to improve the credit score can do so by wise use of credit cards, paying bills on time and in full, disputing and fixing all errors on the credit report, keeping credit card balances under 30 percent, spending than your income, getting a secured credit card, creating an emergency fund, strategically applying for new credit or loans and only when necessary, monitoring the credit report, reducing debt, and not closing unused cards for a longer credit history.

There are many companies that offer credit repair services to improve credit. However, it is important to know that there are several organizations that are engaged in credit repair scams. Hence, it is vital to thoroughly research, ensure that you identify correctly, and avoid all scams to protect yourself.

The federal consumer protection agency, viz., The Federal Trade Commission (FTC), has stated that legal credit repair institutions never make claims like they will easily remove negative credit history, or they will legally create a new credit identity.

As per the FTC, some warning signs of companies engaged in credit repair scams include:

  • Not enumerating your legal rights
  • Demand for upfront payment for credit repair services
  • Advises against contact with credit reporting agencies
  • Asks you to lie on credit or loan application form
  • Recommends you to dispute correct information on credit report, only because it is negative