Some consumers think that credit scores are only reviewed when they apply for a new loan or a credit card. Credit ratings are used to determine creditworthiness for these purposes, but they can also be used to determine if you qualify for a new utilities account, if you can rent a new home, what your insurance rates may be and even if you pass a screening process for a new job. You may assume that you have a good score, but you understandably want to know exactly what your credit score is.
Factors That Affect Credit Scores
Before you review your actual credit scores, you should be aware of the many different factors that are analyzed by the credit reporting bureaus. These factors include the number of accounts that you have open, the length of time that you have had the accounts, your payment history, how close your account balance is to being maxed out and more. Other factors, such as tax liens, judgments and other related matters may also show on your credit report.
How to Get Your Credit Report
Three primary credit bureaus gather information from your creditors and other sources regularly, and they analyze this information to determine your score. Not all bureaus receive all of the same information, and the bureaus each have a different method to analyze the data that they receive. Therefore, you have three different credit scores. You can obtain a full credit report for free once per year from each bureau. You can typically request your free credit report online and gain immediate access to it.
What Does Your Score Mean?
Each credit report that you obtain will have a different credit score. Understand that your credit score can fluctuate substantially within a short period of time if you have derogatory or negative items being reported on it, if you take out a huge new loan or if other factors change. A good score is generally considered to be 690 or higher, and an excellent score is above 720. A bad score is below 630. Each lender may analyze scores differently. For example, some may only look at the score from a specific credit reporting agency. Others may take the middle number, or they may average all three numbers.
Even individuals who have a good credit score can take steps to improve their rating over time. For example, paying down outstanding balances and maintaining a good payment history for a longer period of time may help. If you notice any incorrect information, contact the credit bureaus to determine their correction process. Correcting false information may result in a dramatic increase in your credit rating, but the correction process could take several weeks or longer.