If one thing is true, it is that credit score is one of the most important thing when it comes to asking for a loan.
Here at Oxford Finance Services, we have mentioned on multiple occasions that having a good score might be the difference between getting the money you need and not getting approved at all.
Hence, if you want to check your credit score in order to know its actual status, then do it!
Nonetheless, there are some crucial factors that you need to know before checking your score.
The information you can get from checking your score will reveal how lenders see your loan applications.
In this blog post, we will cover information on:
- The importance of your credit score.
- Is it valid to get obsessed with checking your score?
- How to check a credit score.
- The difference between credit reports and credit scores.
Two words: highly important.
Having a good credit score might be the key to saving hundreds of dollars when applying for a loan.
It doesn’t matter if you want to get a personal loan, a mortgage, or a car loan, having an outstanding score will speed up the process a lot.
Not only will it speed it up, but it will also make things a lot easier for you. For example, a person with a decent score can get approved instantly for a loan, while an individual with a poor credit score would need to look at other options.
Therefore, if you want to maintain a good credit score, remember to:
- Always make payments on time.
- Never miss a deadline.
- Build credit history asking for loans you need.
- Be transparent with your personal information (address, income, etc.).
So, why is it important to check the credit score in the first place?
One of the biggest advantages of checking the score is to determine your current credit position.
Knowing what lenders may see will allow you to understand what alternatives are better for you.
Your credit history is a vital piece of information for your overall financial wellbeing.
Lenders will use the information on your credit score to make a lending decision by determining the likelihood of you paying back your debt.
Besides, by checking your score, you can actually know if accounts are appropriately reported. Sometimes, lenders make mistakes when reporting a payment.
If you check your score, you can check and correct this.
Last but not least, you can also identify inaccurate information in your credit report by regularly checking. This will allow you to dispute the information if you find something out of place.
Before answering this question, it is vital to know that there are two main credit scoring models in our country.
- The first one is FICO. Lenders have a clear preference for this model, and it’s based on payment history, amounts owed, length of credit history, and other factors related to the borrower.
- The second one is VantageScore. This model is also influenced by payment history, duration of credit, and total debts.
You can check your credit score for free once a year in the Annual Credit Report.
Nonetheless, if you want to check your score multiple times, FICO scores usually cost around $20 per score (consider there are three big credit bureaus), while VantageScore usually costs around $15.
Obviously, it is not recommended to pay this amount every single month, so think carefully before checking your score.
Basically, a credit report offers a bigger picture of your credit while detailing precise information about your credit activity and credit situation.
Thus, credit reports include a lot of information related to your credit accounts, credit limits, public records, and more.
On the other hand, your score is just a three-digit number ranging from 300 to 850 to identify the risk associated with your credit file.
As you might know by this point, the score is divided into poor, average, good, and excellent.
The higher your score, the better are your chances of getting loans approved.
So, long story short, credit reports give you concise and accurate data related to your credit history, while a credit score is nothing but a number.
When you might need one or another, the scenarios are different, so be sure to do research before deciding which information you genuinely need.
Now that you know what credit scores are and why to check them, we must mention something: don’t get obsessed with checking your score.
If you know you are doing things right, then your score will look good. On the other hand, if you know you messed up because you missed a payment. Don’t worry, it happens to the best of us.
In that case, it would be nice to work on improving your score again.
Either way, if you want to check your score, you can do it pretty easily.
The first and most reliable option is checking your FICO score. You just need to go to MyFICO.com and load all the information they ask you for.
You can also check if your credit card company offers a free FICO score, but this is not always the case.
Secondly, you can go to VantageScore.com to get a less expensive deal when checking your score.
Yes, credit scores impact the credit cards and loans you qualify for.
Besides, the interest rates will always be better if your score looks good enough.
This creates the need to understand our current credit position in order to select the options we have available for ourselves wisely.
Remember that loans are just a financial tool to help us improve our situation. Your credit score should always be treated as a top priority for you. At the end of the day, you never know when you will end up requiring a loan or a credit!