Credit scores are numerical values assigned by the three credit bureaus: Equifax, Experian, and TransUnion. FICO scores are calculated by the Fair Isaac Corporation, while VantageScore was developed jointly by the three credit bureaus. In general, VantageScore is less commonly used than FICO score in lending decisions. Higher scores indicate less risk as they represent lower levels of default and delinquency. The difference between what credit score is good will depend on the lender you are applying for or your financial goals and appetite for risk.
You can easily find out what your credit score is by contacting any of the three major credit reporting agencies, Equifax, Experian and TransUnion. Remember that many creditors like banks, finance companies and stores will also have access to your report. This can affect the cost of a mortgage, a car loan or even just getting a cellphone plan. Now you know why it’s important to keep tabs on your credit score! It’s not enough to just look at how much debt you’re carrying; if your debt-to-income ratio (i.e., how much money you owe in comparison to how much money you make) is high, then this could adversely affect your credit score.
One thing you can do to check your credit score for free and get alerts about any changes, including if there are errors in your report or if someone tries to steal your identity, is to sign up for a free credit monitoring service. This type of service provides a real-time look at what information companies have collected on you as well as tips on how you can address inaccuracies in your report. The downside is that these services often come with a monthly fee; however, some offer them for free. It may be worth it to pay the monthly fee, but only if you’re willing to cancel the service when it expires. As an alternative, consider signing up for a trial membership with one of these sites just so you can see what they offer (or don’t offer) before paying the monthly fee–many will allow you to cancel without being charged anything.
Consider applying for a secured credit card if you don’t have any other type of credit history and want a simple way to build your score while paying off debts at the same time. Choose one with low annual fees and no early-credit-card-account-closure fee, as well as good terms like grace periods (for unpaid balances) and rewards programs that help save money by earning points every time you make a purchase with your card.