Financial Education Credit Score

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You are, however, legally entitled to a free credit report under US Federal law (and residents of certain states are eligible for additional entitlements).

Consumers are able to get a free credit report once a year via the aptly named Annual Credit Report service, a unified service via the three main credit companies (Equifax, TransUnion and Experian).

It’s highly recommended to take five minutes out of your day to check out your own credit file, since it’ll give you good insight into what lenders see when you apply for credit or other financial products.

You are, however, legally entitled to a free credit report under US Federal law (and residents of certain states are eligible for additional entitlements).

Consumers are able to get a free credit report once a year via the aptly named Annual Credit Report service, a unified service via the three main credit companies (Equifax, TransUnion and Experian).

It’s highly recommended to take five minutes out of your day to check out your own credit file, since it’ll give you good insight into what lenders see when you apply for credit or other financial products.

However, this doesn’t include your credit score because…

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A credit report, more properly known as a credit file disclosure, consists of information on your financial history and past behavior. Exactly what appears on the report depends on which agency is providing it since the aforementioned three credit reference companies each compile your report differently.

When you hear the phrase ‘credit score’, it’s usually in reference to the FICO score. This is a complicated equation placing you on a numeric scale, measuring how likely you are to default on credit payments… but this is where things get even more difficult to follow. Bear with us!

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The FICO score is generally the one lenders go by, but it’s not the only one in existence. There’s also the VantageScore, CEScore, and others that are used by lenders.

Even within the FICO score itself, there isn’t a single scale. Numerous scores exist depending on whether you’re being assessed for a mortgage, credit card, auto loan and numerous other types of credit.

To further add to the confusion, precisely how your FICO score is calculated is a closely-kept secret. If you’re really curious as to what goes on behind the scenes, here are the broad strokes:

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For the most part, there’s no need to get weighed down in details. In fact, you may be worrying about your credit score too much entirely…

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Lenders use a variety of factors in deciding whether or not to offer credit, not just your FICO score or credit report. Similarly, there are plenty of financial providers who don’t discriminate against those with poor credit scores (such as our own payday loan service). In addition, applying – or even being turned down – for new lines of credit doesn’t affect your credit score nearly as much as scaremongers make out, and some argue that it has zero impact on your score at all.

Further good news is that a poor credit score won’t dog you forever, and any indiscretions tend to disappear from your file (and stop affecting your score) over time.

Either way, you’re likely to be interested in exactly where you stand. There are plenty of online services out there, but there is a key consideration you’ll need to make before signing up for a free credit report or credit score service.

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Given that just about everyone in America has a credit score* (or, as we’ve discussed, several) it’s unsurprising that there are so many sites purporting to let you know what yours is for free. Caveat emptor…

Unlike your credit report, which you’re legally entitled to review for free (see above), there’s nothing particularly wrong with a site charging for access to your credit score. What is a little shady, however, is the common practice of claiming the service is free then using the financial information you used in a one-time sign up to then charge recurring payments after the ‘free’ period is over (and people often only notice long after small payments have been taken). Another oft-used tactic by some of the less reputable companies is to sell your contact details on to other companies, either without your consent or by making the opt-out box virtually impossible to find.

Always check the on site T&Cs, especially before handing over your account details.

* We said virtually everyone has a credit score, but a few adults don’t; namely those who have never applied for credit or opened a bank account in their name. Ergo, virtually everyone has a credit score.