How Do I Find My Credit Score and What Does It Mean?

So what is the difference between credit rating and credit score, as the two are often mixed up? They are similar in names, as well as search results on the internet. Often when you search for a credit score, free credit rating results will pop up even though the two are different.

A credit rating is more of a financial review, and your credit score is what will qualify or reject you when borrowing money. Here we will outline the differences and help you make the right application.

Credit Rating

A credit rating is an overall review of your finances. It pulls your personal information, as well as bank accounts and loans that you have. It is important to review your rating at least once a year and make sure it is up to date and accurate.

You can do this at Annual Credit Report, which is the only federally protected website that the three major credit bureaus use. You are entitled to one completely free report from Equifax, TransUnion, and Experian each year.

Here are the categories you would see after pulling your credit rating:

  • Personal ID – Your name, address, phone number, email address, social securities number and birthday will be required for sign-up to make sure it matches your personal identification on file. Your employment information may be displayed as well.
  • Trade Lines – Your trade lines are any accounts or lines of credit that you have. All lenders report their accounts here, and your payment history affects your overall credit. The type of loan is also reported here, whether it is a mortgage loan, a car loan, or a personal loan.
  • Inquiries – Inquiries is an umbrella term for any inquiry you or your lender has made on your behalf. This includes any credit score check, mortgage application, etc. It will list “voluntary” if it was pulled by you, and “involuntary” if it was pulled by a lender with or without your permission. Inquiries remain on record for two years.
  • Public information  – This is your information pulled from your local state and county courts. Any debt owed to collection agencies will be listed here, as well as lawsuits and bankruptcies.

Credit Score

Plainly put, your score is a mathematical equation used by lenders to logically guesstimate if you are a poor, fair or good risk. The likelihood of everyone being able to pay back their loans is not likely, so they want to know where you are on the scale.

Based on the information found in your credit report, you are given a number between 300 and 850. These can vary slightly from different bureaus depending on which ones the lenders are reporting to, but they are usually similar if not the same.

Inquiries made by you will not affect your credit. Even though they are listed on your credit rating, there is no need to pull a new score after making these “soft” inquiries.  Credit scores can be negatively affected when too many applications are made within a certain time period.

A credit score categorizes your number into great, very good, good, not bad and bad for the following areas:

  • Your overall credit score number.
  • Your payment history.
  • Your current amount of debt.
  • Your length of credit history.
  • Your amount of new credit taken on.

The categories factored into your overall credit score and their percentages are:

  • 35% past payment history on student loansmortgage loans etc.
  • 30% loan amounts due.
  • 15% credit history total length, and any defaults from the past seven years (on average).
  • 10% existing and new accounts to make sure you aren’t overextended on loans.
  • 10% different types of credit.

How and Where Do I Check My Credit Score?

Unlike credit reports, you will have to pay for your credit score to be pulled, unless your credit card company or bank is one of the companies that have started providing credit scores on statements or online banking.

FICO is the only federally regulated credit score agency. There are many other websites, and they might claim they are free, but it’s usually only for a month or so before they start charging the card number you gave while making an account. All major credit bureaus charge for a credit score.

All companies use slightly different algorithms to determine your credit score. This means the final score given to you may vary slightly between companies. It is something to keep in mind but usually won’t make a big enough difference to change the outcome of a loan acceptance over a loan denial.

Once you have your credit score you can adequately apply for loans you should qualify for the first time through.

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