Free Annual Credit Report

You have likely heard of getting a free credit report.  You are allowed one free credit report each year.  The free annual report is guaranteed by law and each of the three major credit reporting agencies are required to comply with the law.  However, getting a free credit score is not as easy.  While you can always purchase a credit score, is it possible to get a credit score for free?  Are credit companies simply giving away free credit scores to their visitors, or does a credit score require putting down a credit card?

In most cases, you will have to pay for a credit score. However, there are some instances where you can get a free credit score.  First, the three major credit reporting agencies will occasionally offer a free credit score.  The free score often comes with a credit report.  Once the free credit score is received, users can find out where they stand with the rest of the people who have credit.  When the credit company is giving a free credit score away, individuals will have to go to their website and fill out relevant information.  They will then be sent their credit score.  Sometimes, there are third parties that offer a free credit score.  It is important to note that one must be careful when they obtain a free credit score in this manner.  They will often have to give a credit card number, and their credit card might be billed at a later date.  Thus, in that case, the credit score is not actually free.  Be sure to read all of the fine print when obtaining a free credit score.

In most cases, the credit score will actually have to be paid for.  When someone wants to buy a credit score, they can go to www.annualcreditreport.com.  Once there, they can order their free annual credit report.  After they order the report, they will have the option of purchasing a credit score.  Credit scores are relatively inexpensive and can be purchased from the website of a credit bureau at the same time the free credit report is obtained.  The purchased credit score will offer the most up to date information in regards to the score. Once the score is obtained, it is a good idea to compare the score along with the national average.  In addition, the credit score should be analyzed in order to see what kind of loans and interest rates will be able to be obtained with the score.  In many cases, the individual will also need to examine their credit report and look for ways to improve their credit score.

No matter if you choose a free credit score or if you choose to pay for one, it is important to get a credit score so you can determine your creditworthiness.  You need to know how creditors view you.  That way, you can make sure you are being offered competitive rates.  Also, you can look for ways to improve your credit and find out how your habits are hurting your credit.  Then, you can start to build a strong credit profile.

Most free credit reports include a credit score on them as well. Credit scores are numerical calculations that are supposed to indicate the risk that you will default on your payments. High credit scores indicate less risk and low scores indicate potential problems. Most credit scores range from lows of 300–400 to highs of 800–900. The biggest credit scoring company, Fair, Isaac and Company, estimates that about 40% of Americans have scores over 750. Anything over 750 is considered to
be a very good score by most lenders.

Free Credit Score

Lenders use credit scores to help them decide whether you are a good credit risk for new credit, whether to increase or decrease an existing line of credit, to determine how easy it will be to collect on an account and even to project the likelihood that you will file for bankruptcy. Credit scores are used in about 80% of all mortgages as well as in car loans, credit cards and insurance policies. And your credit score not only determines whether you get a loan, but also what interest rate will be applied. If you get your Fair, Isaac credit score (see below), you can visit its website (at www.myfico.com), plug in your score and find out the prevailing mortgage interest rate that most lenders charge to people with that credit score.

Even though your score may determine whether you can get a loan, credit bureaus are not required to disclose your score to you (therefore, they won’t appear on a credit report that you order). However, change is on the horizon. A new California law requires that mortgage lenders disclose credit scores to consumers shopping for a mortgage. Other states or the federal government may enact similar laws in the future.

Another big improvement recently came from Free Annual Credit Reports who have voluntarily made credit scores available for a free. To get your Fair, Isaac credit score, visit FreeAnnualCreditReports.org. A few other companies that create credit scores
have followed suit. Trans Union now provides your credit score (at no extra charge) when you order a Trans Union credit report. Experian also offers a credit score product for $12.95.

Although being able to view your credit score is a significant improvement, the jury is still out on how helpful the score will actually be. It is likely that you will get different scores from different companies. And consumer experts are not certain that the score you order from the Internet will be the same one that lenders use to determine whether they will extend credit to you.