Credit Monitoring | Free Credit Report

Every 12 months, you can get your credit report for free from each of the 3 major credit reporting agencies (Experian, Equifax and TransUnion) by visiting the www.AnnualCreditReport.com website. If you want access to your credit scores, or if you're interested in powerful services like credit monitoring then you can use the links and banners on this webpage.

Your credit score may seem like a "magic number", but all it really is, is a numerical summary of your credit risk. This three-digit number gives prospective lenders a portrait of your credit history and financial situation, and it can be a deciding factor in whether or not you are granted credit. If you get approved by a lender, your credit score will also affect the terms and conditions of the credit card or loan.

Your personal credit score is determined using the information in your credit report, which can include both current and past accounts, and other records like bankruptcy filings and liens against you. In your application for credit, a lender will consider your score, your income, and the length of time you've been at your current job.

Your credit report contains personal identifiers like your name, social security number, birthdate, and employer information. There are some other things included that have no bearing on your credit score, like your sex, age, marital status, and religion.

You should check your credit score at least one time a year to make sure that it's accurate. Some lenders and creditors only report to one or two of the credit bureaus, so you need to check all three to get an accurate score. It's possible for your credit report to contain inaccurate information, such as an account that belongs to someone else. It's your responsibility to find inconsistencies in your credit report. The www.annualcreditreport.com let's you get your credit report from all three credit bureaus at no charge every 12 months. The credit reports are free, but if you want your credit score, you'll have to pay for a premium service.

Your FICO score is the number by which your creditworthiness is judged. About eighty percent of lenders and almost all credit card companies base their decisions on your FICO® score. Equifax, Experian, and Trans Union all have different methods for figuring your score, but they are all based on the FICO number. Because each credit bureau has its own scoring method, and because each report may not contain the exact same information, your score will differ from one agency to another.

Experian uses the FICO score, and a score can be anything from 330 to 830. Equifax uses the Beacon score, and it ranges from 340-820. The Trans Union score is called the Empirica score, and it can range from 150-934. Of course, higher is better, and the average American's credit score is about 700. The Fair Isaac company doesn't tell how it figures a person's FICO score, but they will tell us the weight that certain factors carry in figuring a score:

• 35% of your FICO score is based upon your payment history. Your score can be damaged by late payments, bankruptcies and accounts sent to collections. Your score can be improved by paying bills on time and consistently.
  
  
• 30% of your score is based on your use of the credit available to you. If you have a high balance on a credit card, that can lower your score. Keeping a balance low shows that you can manage your debt, and it will increase your score. Keep revolving credit balances at 30% or less of your total credit limit. Closing an account you don't use can lower your score if you carry balances on other accounts because it raises the amount of credit you are using in proportion to the total amount of credit you have.
  
  
• 15% of your score is based on the length of your credit history. This includes the ages of your oldest and most recent accounts, and the ages of your other accounts. Closing accounts can "ding" your credit score, and opening accounts in rapid succession will also. If you are new to credit, it will take time to prove your creditworthiness. Showing that you can pay on time will gradually raise your score.
  
  
• 10% of your FICO score is based on your new debt. Credit inquiries and new accounts are factored in, and running up debt quickly can lower your score. Using credit wisely after you've come out of debt can greatly improve your score.
  
  
• 10% of your score is based on the types of credit you have. Your score can be affected by any mortgages, loans and credit accounts, and this portion of the score can be more important for those who have a limited credit history.

The Fair Isaac Corporation introduced its updated FICO scoring system in January of this year. It's commonly known as FICO 08, and it's designed to be better at giving a fair assessment of a consumer's likelihood of repaying their debts. The new scoring system could greatly impact the credit scores of high-risk consumers- those who have blemished credit, and those who don't have much of a credit history. Under the new program, a consumer who has a hard time paying a loan on time, or who uses more of their available credit will see their score suffer.

Both the conventional FICO score and the new model can tell a prospective lender whether or not a consumer is a good risk. For those applying for credit, a little diligence will help to ensure that the credit score is accurate, and that will make it a lot easier to get new credit and build a good credit history.