How to Find Out Your True Credit Score

Your credit score is one of the most important numbers in your financial life. It gives lenders an idea of how risky it is to lend money to you. The higher your score, the better interest rates and loan terms you can qualify for. That’s why it’s so important to understand your true credit score and take steps to improve it if needed.

What Is a Credit Score?

A credit score is a three-digit number calculated based on information in your credit report. It ranges from 300 to 850. The higher the number, the lower the perceived risk.

Credit scores are calculated by credit bureaus like Experian, Equifax, and TransUnion. The most commonly used credit score model is the FICO score. FICO scores make up 90% of lending decisions.

Why Your True Credit Score Matters

You actually have multiple credit scores since each bureau calculates your score using the information in their credit report. Lenders may use different bureau reports, so your scores can vary.

This is why checking just one score doesn’t give you the full picture. To understand your true credit standing, you need to check your scores with all three bureaus.

Even a small difference in scores can impact your interest rates. And if you’re trying to improve your credit, you need to monitor all three to see an accurate change over time.

How Credit Scores Are Calculated

While the exact formula is proprietary, FICO does reveal the general components that make up your score:

• Payment history (35%) – Whether you pay your bills on time. Late payments can negatively impact your score.

• Amounts owed (30%) – How much you owe compared to your total credit limits also called credit utilization ratio. High balances hurt your score.

• Length of credit history (15%) – How long you’ve had credit accounts opened. A longer history is better.

• New credit (10%) – How many new accounts you’ve opened recently. Too many new accounts can lower your score.

• Credit mix (10%) – Whether you have experience managing different types of credit like credit cards, installment loans, and mortgages.

5 Ways to Check Your Credit Scores

Checking your own credit does not impact your scores. Here are some options for accessing your scores:

• Check With Your Credit Card Issuer or Lender – You can usually see your score by logging in to your online account or using your card issuer’s mobile app.

• Use a Free Website – Many free sites like Credit Karma provide free access to your credit scores. Just be sure to check reports from all three bureaus.

• Buy Your Scores – You can purchase your credit scores directly from Experian, Equifax, and TransUnion. Costs range from $5-$25 per bureau report.

• Get Your Free Annual Credit Reports – Visit annualcreditreport.com to get your reports from each bureau once per year for free.

• Work with a Nonprofit Counselor – Nonprofit credit counseling services can help you understand your reports and scores.

How to Improve a Low Credit Score

If you find your credit score is lower than you’d like, take these steps to start improving it:

• Review credit reports for errors – Dispute any inaccurate information bringing your score down.

• Pay all bills on time – Set up autopay or reminders to avoid missed payments.

• Lower credit utilization – Pay down balances to decrease your debt-to-limit ratio.

• Avoid new credit applications – Too many new accounts can signal risk to lenders. Wait 6 months between applications.

• Monitor all scores regularly – Check your scores with all three bureaus monthly to see progress.

Credit Score Ranges and What They Mean

Understanding credit score ranges can provide insight into what terms you may qualify for.

• Poor credit (300-579) – Considered high risk for lenders. May only qualify for bad credit loans if approved.

• Fair credit (580-669) – Still risky. May get approved but pay higher rates.

• Good credit (670-739) – Near or slightly above average. Considered low risk for lenders.

• Very good credit (740-799) – Well above average. Qualify for best rates on loans and credit cards.

• Exceptional credit (800-850) – Little to no risk. Get approved for largest loans with lowest rates.

No matter what your current score, checking it regularly and adopting positive credit habits can help build and maintain your true credit score over time. Monitor your reports from all three bureaus and take steps to improve your standing. Your good credit health will pay off when you need it most.