How to Check Your Credit Score

Your credit score tells banks, lenders, and you how well you use credit and how good you are at paying off debt. Think of it as a quick summary of previous credit utilization and your history of paying it off. It’s often categorized into ranges.

What is a credit score?

This number usually falls between 300 to 850 and is considered an estimate that tells lenders the likelihood that you’ll pay back a loan and in a timely manner, according to the Federal Trade Commission.

A scoring model is used by companies that look at your credit history, how often you pay bills on time, your credit utilization, the types of credit you have, and whether you’re a good candidate for a loan.

Why is it important to check your credit score?

Knowing where you stand with your credit score can give you a better idea of whether you’ll be able to get a loan and the types of interest rates you might have to pay.

It’s also helpful to avoid surprises when you’re making purchases or exploring your options for taking out a loan.

Impact on loan approvals and interest rates

Generally speaking, higher credit scores lead to lower borrowing rates being offered as lenders are less concerned about you defaulting on your obligations, says Brett Holmes, partner at financial planning firm Berman McAleer. “Many lenders have minimum credit scores they are willing to work with, so a better credit score can open doors to working with certain lenders who offer better rates.

Knowing that your credit score is in a healthy range can help when you’re looking to get a loan, says Andrew Lokenauth, founder of TheFinanceNewsletter.com.

Detecting identity theft and fraud

Even if you get fraud alerts from your financial institutions, it’s important that you review your credit card and bank transactions every few days.

Monitoring your credit score regularly can help you detect fraud before it becomes a bigger issue, Holmes says. “If someone stole your identity and opened a line of credit in your name, it would show up as a new credit line and most likely lower your credit score. As they started to use it, your credit usage would typically skyrocket, and your credit score would plummet.”

How to obtain your credit score

You can request a free annual report from one of the three credit reporting bureaus (Experian, TransUnion, and Equifax). Many banking apps also offer credit score “soft” reporting for free. Capital One has the “Creditwise” monitor available on its app; Chase offers it through the “Chase Credit Journey” section of its app.

Free credit score services

There are several ways to get your credit score for free:

• Credit card companies often provide free scores monthly; for example, Discover Credit Scorecard is free for everyone, even non-customers. 
• Third-party personal finance or budgeting apps can provide your monthly credit score
• Many banking apps provide customers with credit scores for free.

Annual credit report requests

You can get free weekly reports from all three unions via AnnualCreditReport.com, which is recommended by the Consumer Financial Protection Bureau. You can also get your credit report by calling 877-322-8228.

Credit monitoring services

You might want to subscribe to a credit-monitoring system to manage your credit. Lokenauth says they can help in these ways:

• Alert you of suspicious activity in real-time
• Help protect against identity theft
• Monitor all three credit bureaus for you
• Provide regular credit score updates and changes
• Possibly offer identity theft insurance

How to interpret your credit score

Depending on the scoring model you use to obtain your credit score (such as FICO or VantageScore), you’ll likely see an analysis of whether your score is excellent, good, fair, or poor. Credit scores range from 300 to 850 and can vary slightly according to which model you’re looking at.

Credit score ranges

These FICO credit score ranges indicate to a lender whether your credit is poor, fair, good, very good, or excellent:

• 300 to 579: Poor credit
• 580 to 669: Fair credit
• 670 to 739: Good credit
• 740 to 799: Very good credit
• 800 and up: Excellent credit

Factors influencing your credit score

Banks or other lenders use your credit score to assess how risky it is to loan you money and expect to get it paid back. A poor credit score might indicate a history of late payments or high debt loads, while an excellent score could indicate a steady repayment history. 

“Don’t stress too much about the actual credit score number as it takes time to build credit and it is normal for it to fluctuate,” Holmes advises. “When you’re trying to improve your credit score, stay positive and work on getting it heading in the right direction.”

Here are some suggestions from Lokenauth to help keep your credit in good standing and work your way toward a good or excellent credit score:

• Always pay bills on time: This helps improve your credit score.
• Keep credit utilization below 30%: You want to keep debts in this range so you don’t overextend yourself. A free debt tracker can help.
• Leave old accounts open: Credit history length is factored into your score, so don’t close accounts in good standing once they’re paid off.
• Mix up your credit types: Maintain different types of credit, like a home loan, student loans, and credit cards, instead of borrowing too heavily in one area.
• Reduce debt systematically: Work to pay off your debts each month.

How often should you check your credit score?

You can check your credit score as often as you need to if you’re concerned about suspicious activity. “I would suggest looking at it once a month when you pay your bills, as it is very easy to monitor passively through the banking apps for free if you already have an account with those banks and you are already in the app to pay the bill,” Holmes says.