- A credit score is a number between 300 and 850 that represents your creditworthiness.
- Consumers can get their credit score for free, or it can be included as part of a paid service.
- Scores will vary slightly depending on the credit bureau and credit scoring model your score came from.
Understanding credit scores
A credit score is a number from 300 to 850 that predicts how likely you are to pay back a debt on time. Consumer credit reporting agencies like Experian, Equifax, and TransUnion look at a range of factors including bill-paying history, current unpaid loans, and the share of available credit that are used to calculate credit scores. The two most common credit scores consumers are likely to come across are FICO and VantageScore.
Your credit score determines whether you get approved for a loan or credit card, and the terms on that borrowed money. It can also determine rates on insurance and apartment lease decisions. Given the immense impact credit scores have on your life, you should be able to access them for free — and luckily, you can.
Understanding credit score ranges
Credit score ranges help lenders determine the risk of lending to a borrower.
Credit scores are based on payment history, overall debt levels, the number of credit accounts and the mix of your credit profile.
Your credit score can decide whether you are approved for a loan and at what interest rate.
A FICO score between 740 and 850 is considered exceptional, while scores between 700 to 750 are considered very good.
A score between 670 to 739 is considered a good credit score.
A score between 580 to 669 is considered a fair credit score while a score under 580 is considered a poor credit score.
How to check your credit score for free
In the past, it was common for consumers to have to pay a fee to get access to their credit scores from one of the credit agencies. Today, however, there is an abundance of free options available. For starters, most credit card companies will provide your score on your monthly statement or anytime you check your account online.
Best methods to check your credit score
Credit monitoring services are another great place to access your credit score. These services monitor your credit reports for any changes, but often come with additional services to reduce the risk of identity theft and assist you in building credit.
Free credit score check services
While many of these services do charge money, some of the best credit monitoring services are free, such as Capital One CreditWise or Credit Karma. Experian also allows you to see your credit score with their free service, Experian Boost.
Still, companies can and some still do charge a fee, as they are entitled to do so under the Fair Credit Reporting Act (FCRA). However, with all the credit scores accessible for free, there's no reason you need to pay for your score, unless you're paying for a service that includes credit scores in their list of features.
Factors affecting your credit score
Now that you know how to get a hold of your credit score for free, what exactly are the factors that go into its calculation? It's slightly different depending on whether you're looking at a FICO or VantageScore. Let's break it down.
FICO
Payment history (35%): The most important factor in your FICO score is whether you've paid previous loans off on time. It helps lenders determine how much risk they will take on when extending credit.
Amounts owed (30%): While having a lot of outstanding debts isn't necessarily a bad thing, it does show how much of your available credit you're using. Lenders can look at this and determine whether or not you're overextended. Your credit utilization ratio, the amount of revolving credit you're using compared to available credit, also plays a part in this category.
Length of credit history (15%): A longer credit history is a positive, but not a requirement for a good score.
Credit mix (10%): Your FICO score takes into account your mix of credit cards, retail accounts, installment loans, finance company accounts, and mortgage loans.
New credit (10%): The score looks at recent credit accounts and the time frame in which they're opened as they can represent a greater risk.
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VantageScore
VantageScore, the second most popular credit scoring algorithm, uses the same general factors weighted differently to determine your overall score. The breakdown of contributing factors is as follows.
Your payment history (40%)
Length and types of credit (21%)
Credit utilization (20%)
Credit balances (11%)
Recent credit applications (5%)
Available credit (3%)
These breakdowns can overcomplicate the credit-building process, though it does key us into the behaviors that the credit scoring algorithms reward. The best thing you can do is pay your bills on time, only apply for credit if you need it, and keep your credit card balances low. With payment history and length of credit history being two of the most significant factors in credit building, it's also key to understand that building credit takes time.
Related: The best loans for fair credit »
Difference between credit scores and credit reports
If you look at a credit score as the grade lenders use to determine your creditworthiness, think of the credit report as all the "work" that goes into that grade.
Your credit report details your credit activity. It lists current and historical accounts, credit limits, balances, payment histories, the dates accounts were opened, and bankruptcies. As the base on which your credit score is calculated, credit reports don't actually include your credit scores.
Consumers are normally entitled by law to one free report every 12 months from each of the three major reporting companies. They can be requested at AnnualCreditReport.com.
Why is checking your credit score important?
Keeping a close eye on your credit score and credit reports, whether you get them for free or pay for them, is key to staying on sound financial footing. By monitoring both, you can take steps to correct small issues before they become something that can hamper your ability to take out loans. They can provide valuable insights into what factors might be pulling down your score, according to Kendall Clayborne, a certified financial planner at online bank SoFi.
"From here, you can formulate a plan for what will make the biggest impact for you personally," Clayborne says.
Checking credit score frequently asked questions
No, checking your credit score will not lower it. Your credit reports do not show when you check your credit score, so the credit scoring algorithms have no way of knowing if you checked your credit score.
Credit Karma is a popular free service that offers updated credit scores from two major bureaus.
Many banks, credit unions, and credit card issuers offer free credit score updates to their customers.
Paid credit monitoring services can offer more comprehensive monitoring and additional features like identity theft protection.
