Lenders have been using credit scores in their decision-making processes for well over 20 years, but they are no longer tools used exclusively by the financial services industry. Scores are increasingly available to consumers as well, chiefly via websites that offer credit scores as part of free registration or subscription services. These sites typically tailor credit card advertising to consumers, based on their credit scores, but the sites also offer a variety of information to educate consumers about score improvement and smart credit management.
One of the most common questions I get when discussing the many sites that give away free credit scores is which are the best and which ones should people use. My take is very simple: free is free and you can never have too much access to your personal credit information. So, why not take advantage of all of them because it won’t cost you more than your time to set up your user name and password information?
You’ll be able to gain free access to your credit scores at least once every month from multiple credit reporting agencies. This almost-constant access can become overwhelming and lead to unintended obsession over small but normal changes in your scores. So, when you begin to use these free score sites you should keep in mind a few “best practices” points.
- Your scores are likely to change slightly every single month. This is normal. Every 30 days your credit reports go through a cycle of updates from your creditors. Some accounts are getting older, new transactions are added, balances fluctuate, and other normal changes occur. Every one of them can have an influence over your scores. Don’t panic.
- Focus on the credit report data as well as the score. Remember, your credit scores are a product of the information on your credit reports…nothing more, nothing less. And although it’s incredibly valuable to have access to your credit scores, your credit reports are equally important. Focus on both.Many free-score websites also provide access to either a full credit report or a credit report summary. Don’t forget to take advantage of that aspect of these websites. And, don’t forget to leverage your right to a free credit report from all three of the major credit reporting companies, Equifax, Experian and TransUnion, once every 12 months from www.annualcreditreport.com.
- Don’t skip free months. This seems obvious but the best way to get full value of these sites is to check your scores once a month. Most of the free score sites will prompt you to check your free scores via a reminder email. You should be looking for meaningful changes in either direction.
If your scores decrease considerably—say 50 points or more—then your credit report experienced a change about which you should be concerned. Either something derogatory hit your credit report or your credit card debt increased considerably. If you’re unaware of any event that might have brought about the change, you should probably obtain a full credit report to investigate the cause.
If your scores increase considerably, then your credit report experienced a change about which you should be excited. Either something derogatory was removed from your credit report, your credit card debt decreased considerably, or a combination of both.
Popular Articles
Consumer FAQ: Benefits of Adding Rent and Utility Data to a Credit File
Advantage of Adding Rent and Utility Data whitepaper
Credit with a Conscience fact sheet
Driving Financial Inclusion with Data and Analytics fact sheet