Credit Score

What about the credit score? It's not free unfortunately.

While the FACT Act entitles consumers to one free copy of their credit report per year, getting a credit score is not free. The consumer credit reporting agencies are allowed to charge you a "fair and reasonable fee" for your credit score. Equifax will sell you a FICO score for its report only; Experian and TransUnion offer proprietary scores that are not widely used by lenders.

Many lenders rely very heavily on credit scores to determine whether to lend you money and how much interest to charge you . We recommend that you request and pay for your FICO credit score. Upon request, consumer credit reporting agencies must provide credit scores and information on up to four key factors negatively affecting your credit score. Those reason codes will let you know what you should do to improve your credit score.

Credit scores are more important than the average consumer may realize. The score is used in all segments of everyday finance; including credit cards, mortgages and insurance. Most lenders rely heavily on a credit score to determine the amount of risk associated with lending you money and adjust their interest rates accordingly. Credit scores are a representation of your creditworthiness and are used to predict how likely a borrower is to repay the loan. Lenders use these scores to determine whether you qualify for a loan and what interest rate you'll pay. Many factors go into your score including your payment history, the amount you owe, who you owe and the length of your credit history. The number of times you apply for credit also can affect your score.

Now most lenders simply enter your data into a computer and receive in return a three-digit number. Consumers have the right to view all the information used in making decisions on your credit applications. We are here to take the mystery out of credit lending decisions and put you in control of your credit.

What is a credit score? Your credit score is a complicated calculation that indicates how likely you are to make timely payments on credit or a loan. Credit scores have become pivotal in recent years because the lending process has become increasingly automated.

How to check credit score You can order your FICO score through online services developed by Fair Isaac, in partnership with credit reporting agencies.

How credit scores are calculated A credit score is a number reflecting the weight given to many of the variables within your credit history. It is calculated based on a statistical model involving payment history, amounts owed, length of credit history, new credit, and types of credit in use.

What is a good credit score? FICO credit scores range from 300-850, and a score above 700 indicates relatively low credit risk, while scores below 600 indicate relatively high risk which could make it harder to get credit or lead to higher loan rates.

How to improve credit score You can raise your credit score by paying bills on time, keeping balances low on credit cards, paying off debt rather than moving it between credit cards, and taking other measures.

Banks, other lenders and insurance companies check your credit score (also known as your FICO score) when you apply for credit. It’s helpful to know your score in advance of making a loan application so you can work to improve your score if necessary.

Credit scores are determined using information in your credit report. As there are three major credit-rating agencies (Equifax, Experian and Trans Union), you can have a FICO score from each of their reports. It's likely that they're all slightly different. Creditors don't have to report to all three credit bureaus, so they typically report to the credit bureau to which they also subscribe.

• Equifax credit score
• Experian credit score
• TransUnion credit score

It pays to know the credit score

Checking and improving your credit score will pay off because:

• Your credit score is a key factor in determining your access to credit, and the interest rate you'll be charged.
• The list of uses for credit scores is growing. Auto- and homeowners-insurance companies are looking at credit scores to gauge the likelihood of customers' future claims, and setting premiums accordingly. More employers are screening job applicants by credit score. Some landlords consult them before renting.
• Identity theft can be devastating emotionally and financially. Checking your credit score, as well as your credit files, could be your earliest indication of a problem.