Something that can determine what you’re able to do in life is your credit. If you have poor credit, for example, you may be declined when trying to apply for a mortgage to pay for your first home. Today, even employers routinely investigate people’s credit before deciding whether or not to hire them.
Thankfully, there are ways to keep tabs on the health of your credit. The two things you need to keep track of are your credit score and credit history. These are what are most often used by parties like lenders to determine whether or not your credit is poor. In the past, obtaining this information meant spending money. Today, however, you can obtain this information for free.
Part of this was thanks to action by congress. The Fair Credit Report Act, which was enacted in 1970, allows a person to obtain an annual credit report for free from each of the three different major US credit reporting agencies. These agencies include Equifax, Experian and TransUnion. Under the law, each agency must provide you with a credit report at your own request every 12 months free of charge.
Obtaining credit scores can similarly be done for free. Each major credit card company now allows its customers to examine the credit score used to calculate their rates once per month. There are also many websites such as CreditKarma and Quizzle that allow you submit information to retrieve your credit score for free. Many websites also offer similar services for retrieving credit reports.
While obtaining this information is now easier than ever, many people may wonder what they should do with it once they have it. One thing you should be looking for is inaccurate information. Inaccurate data may be evidence of human error that you can have corrected. It could even be evidence that someone has stolen your identity and is ruining your credit without your knowledge. This is why obtaining a credit report every year is important.
In terms of your credit score, it’s good to know what it is. This can allow you to track the score over time and work to improve it. Typically, a credit score will land somewhere between 300 on the low end and 850 on the high end. Scores close to 300 are considered to be extremely risky to lend to. Scores closer to 850 are deemed to be very trustworthy.
Where a person’s credit score lands on this scale is determined by complex formulas used by Fair Isaac Corporation or FICO for short. Things like paying bills on time and maintaining the minimum balance on credit cards can raise a person’s FICO score.
However, to improve your credit score and credit history, you must first make the effort to retrieve that information. Since it can now be done for completely free, it is well worth the effort. Being able to improve your credit can determine your future in many different capacities from what kinds of loans you are approved for to even who hires you.