What’s in a number? Understand the importance of your credit score — starting with how to find it.
Your credit score isn’t just a tool that helps lenders determine how much risk they take on when they lend to you, it can also affect rental applications and even insurance rates. In this guide, we show you where you can find your credit score and what goes into calculating it.
What is a credit score?
A credit score is a summary of your credit history expressed as a number ranging from 300 to 850. While several different credit bureaus offer credit scores, the most widely known type of credit score is developed by FICO (Fair Isaac Corporation). It’s a risk-based system that calculates the possibility of you defaulting on your next loan – the lower your score, the higher the possibility you’ll default.
What are the credit score tiers and ranges?
Identifying your credit score range can be quite difficult. This is because financial institutions determine ranges differently. As a result, with one bank, your FICO score could place you in their “Excellent” bracket, while the same score might place you in the “Good” range with a different bank.
The table below shows credit score ranges/tiers reported by several financial services websites:
|Site||Credit Score Tier 1||Credit Score Tier 2||Credit Score Tier 3||Credit Score Tier 4||Credit Score Tier 5|
|CafeCredit||Bad – 300-639||Fair – 640-679||Good – 680-719||Best – 720-850||N/A|
|CreditKarma||Poor – 549 or lower||Fair – 550-639||Good – 640-719||Excellent – 720 or higher||N/A|
|Credit Sesame||Very Poor – 499 or lower||Poor – 500-549||Fair – 550-639||Good – 640-719||Excellent – 720-850|
|Experian||Poor – 579 or lower||Fair – 580-669||Good – 670-739||Very Good – 740-799||Exceptional – 800 or higher|
|NerdWallet||Poor – 350-629||Average – 630-689||Good – 690-719||Excellent – 720-850||N/A|
|WalletHub||Bad – 300-619||Fair – 620-659||Good – 660-719||Excellent – 720-850||N/A|
Source: https://www.creditkarma.com, https://www.nerdwallet.com, http://www.experian.com, https://www.creditsesame.com, https://wallethub.com, https://www.cafecredit.com.
Do you only have one credit score?
You have multiple credit scores, as each one is calculated differently depending on the credit reporting agency. Companies can request your score from any of these agencies, so may receive a different score depending on the one they call. However, you will always have the same history. If there are no errors listed on your file, you shouldn’t expect too major of a discrepancy between your scores.
Do you own a business? Find out your business credit score
Where can I get my credit score?
There are various ways to get your credit score:
- Your account statement. Some banks and financial institutions list your credit score on your credit card or loan account statement. Check your statement to see if this is a service offered to you.
- Credit score services. There are many free credit score services that don’t require your credit card details. Credit Sesame is one such provider, offering your credit score for free. You can also get your credit report below. Keep in mind these free services don’t provide you with your FICO score; you will instead get a score based on a non-FICO scoring model.
- Credit bureaus. You can find out your credit score and purchase score-monitoring services directly from FICO, Experian, TransUnion and or Equifax.
- Credit or housing counsellors. If you are in need of financial counseling, credit and housing counsellors can provide you with a copy of your credit report and credit score for free.
What makes up your FICO credit score?
As the most common type of credit score, it’s important to know the FICO score is calculated. There are five components which make up your FICO credit score, with each of them weighted differently:
- Payment history: 35%. Your payment history refers to whether you made payments on your credit account on time or whether you have any defaults, liens, lawsuits or bankruptcies listed on your records. If you do make a payment late, how much it affects your score will depend on how late the payment is, how much is owed, how recently it occurred and how many late payments you’ve made.
- Credit utilization: 30%. This is the total amount of your credit card balances divided by your total credit card limits. It makes up 30% of your FICO score, and 30% is the credit card utilization percentage you should aim for.
- Length of credit history: 15%. How long is your credit history? When did you first apply for a credit card or loan? The further back your history goes the better off you may be. If you have a short history, or no history at all, you may find it just as hard as someone with bad credit to be approved for a loan.
- Type of credit in use: 10%. The type of credit accounts you have also have an affect on your FICO score. Whether or not your credit accounts are open won’t matter because the fact you held them will still potentially affect your score.
- New credit: 10%. The number of credit inquiries you’ve made recently and over the past year will affect your score. It’s generally not advised to make multiple inquiries over a short space of time.
Those three digits can make a big impact on your life – good and bad – so they’re worth keeping an eye on. Monitor your credit score carefully and you may just help edge it closer to the 850 mark.
Common missteps that hurt your credit score
You probably already know that being late on payments or defaulting on a loan is guaranteed to lower your credit score. Here are some other ways you can hurt your credit:
- Applying for multiple credit cards or loans. Multiple applications — not preapplications — come with multiple hard credit inquiries, which can have an adverse affect on your credit score.
- Letting your credit card balance get too high. A credit card balance worth more than 30% of your available credit (i.e. the amount you could have spend had you hit your limit each time) will result in a lower credit score.
- Closing credit cards. When you close a credit card, the amount of credit available to you goes down — causing your credit utilization to go up. Closing an old credit card can make your credit history seem shorter than it actually is, lowering your credit score slightly.
- Renting a car with anything but a credit card. Car rental companies sometimes run a credit check on customers who don’t want to pay with a credit card.
- Not paying parking tickets or medical bills. Those bills don’t just pay themselves. After a while, medical bills and parking tickets get sent to collection agencies, which becomes a line on your credit report.
- Signing up for a new phone contract. Yep, phone companies pull a hard credit check when you sign up, causing your credit score to take a temporary dip.
Need to repair your credit? Compare prices of services who might be able to help:
|Company Name:||Phone Number:||Cost of Service|
|CuraDebt: Tax Debt Relief Free Consultation||On average, are 20% of the total debt amount enrolled.|
|Lexington Law||$119.95 one-time First Work Fee, $119.95/Month.|
|CreditRepair.com||$99.95 per month, plus a 1 time charge of $14.99 to obtain your credit reports.|
|The Credit Pros: Legal Credit Repair||$179 per individual and $279 per couple for the first payment.|
|Debt.com||Varies by service.|