Credit card companies, banks and other lenders use your credit score to determine the rate of interest that you’ll pay on credit cards, mortgages, auto loans, etc. So it might seem helpful to know, before you fill out an application, what your credit score is. Will you qualify for the lowest mortgage interest rate when you’re buying that house? Will banks approve you for credit cards for good credit, with their lower interest rates, better rewards and higher limits?
There are some reliable places where you can get a credit score, and we’ll give you a few suggestions below. But since you’ll have to pay a fee to obtain your score from those sources, it’s a good idea to understand what you’re buying.
First of all, you don’t have a single credit score. Credit scores are based on your credit record, but they can be calculated by many different companies, such as FICO, the three major credit reporting bureaus, banks and other lenders and in many different ways. A recent study conducted by the U.S. Consumer Financial Protection Bureau (CFPB) found that there are dozens of models used to figure consumers’ credit scores; FICO alone has 49 different systems.
That means that late payments that drag down your credit score on one type of model may not impact a different model in the same way. In addition, each credit bureau compiles its own reports on you, so Experian could have information on an account that TransUnion and Equifax do not.
So if you’re trying to determine whether a particular bank will offer you credit cards for bad credit or high payoff rewards cards, your credit score may not help much. You could buy your credit score from Equifax, but the bank who’s offering the cards may get your credit scores from TransUnion. The two scores could be close—but there’s no guarantee that they will be.
If you still want a general idea of where your credit score falls, your best bet is to deal with either FICO or the credit bureaus.
FICO will sell you your credit score for $4.95 if you sign up for their credit monitoring service. But be careful—if you don’t cancel the service within 30 days, you could wind up paying $14.95 a month for it. Equifax also charges $14.95 a month for a service that will provide you with your updated credit score twice a year.
TransUnion will give you a “free” credit score if you subscribe to its $17.95 a month credit monitoring system, but you have only seven days to cancel. Experian has several different credit monitoring programs that include credit reports and that range from $14.95 a month to $365 a year.
Is paying for your credit score worthwhile? If you understand all the limitations to your purchase, and are just curious about your numbers on one system, then go for it. If the credit card fraud problems at Target and other retailers have convinced you that credit monitoring is something you want, choose one that includes your credit score.
The Consumer Financial Protection Bureau recommends, however, that consumers concentrate on their credit reports than their credit scores. Take advantage of the free credit report that each reporting bureau is required to provide you each year, and take a good look at it. Have you had a lot of late, missed or partial payments? If that’s the case, you can be pretty sure that your credit score isn’t going to be good, no matter how it’s figured.
To improve your credit score, your best bet is to clean up any incorrect information on your credit report and to concentrate on forming the kind of habits (like making payments on time) that are likely to earn lenders’ approval.