For the past few decades, consumers have been somewhat limited as to how often they can see what’s in their credit history. As a matter of fact, it wasn’t until the Fair and Accurate Credit Transactions Act of 2003 that you could actually request a credit report for free from each of the three major credit reporting agencies: Experian, Equifax, and Transunion.
Thankfully, that’s all changed in recent times, and it’s about to get even better. If you’re looking to do more to better manage your credit, then here’s what’s in store for you.
Credit Reports Will Remain Available Weekly for Free
Since the COVID pandemic, all three of the major credit agencies have been allowing consumers the ability to check their credit reports for free on a weekly basis instead of annually. The idea was that since so many people were hit hard financially by the pandemic this change would allow them to be more engaged with their credit history.
Going forward they’ve recently decided to make that change permanent! From now on, consumers will be able to check their credit history on a weekly basis by requesting a report through AnnualCreditReport.com.
Previously, since consumers could only request one copy per year from each of the three agencies, some creativity was needed to be proactive. Most financial gurus recommended downloading a copy of one report every four months by rotating through each of the three bureaus. Now you won’t have to game the system and will have better access to your information.
Why More Frequent Access is Good
Giving consumers the ability to see their credit reports more often will definitely be an advantage for their financial situation.
Since credit card companies generally update the bureaus once per month, the old system of only receiving your credit report from each company one time each year was problematic. How were consumers to know:
- If their good behavior was paying off?
- How many red flags were appearing in their report?
- If mistakes were being incorrectly reported (such as a late payment that was actually on time)?
Furthermore, even if you’re regularly monitoring your transactions with a budgeting app like Buxfer, you’re still not insulated from the possibility of becoming a victim of identity theft. Stories of people discovering loans or even full mortgages were wrongfully opened in their name are not as uncommon as you might think.
Unfortunately, the only way to learn of such a crime is either when you start receiving bills or to keep a tight watch on your credit activity. Hence, easier access to your reports will help prevent such incidents.
Credit Reports and FICO Scores
While periodically combing through your credit history detail is highly advised, the one thing a report will not tell you is your credit score. Your credit score is a unitless three-digit number between 300 and 850 that summarizes your creditworthiness. The higher your number, the better.
Your credit score is how financial institutions will judge:
- If they should loan you money
- What interest rate (APR) will apply
It’s important to have as high of a credit score as possible because if your number is too low, it can prevent you from qualifying for major purchases like a vehicle, home, or even a cell phone.
The technical name for a credit score is a FICO Score. FICO stands for the Fair Isaac Corporation – the company that developed the algorithm for taking information from consumer credit history and quantifying it. Today FICO Scores are used in over 90 percent of lending activities.
How to Check Your Credit Score for Free
There are several ways to check your FICO Score for free from a variety of sources.
Experian
The easiest method is to sign up for an account with Experian. Experian offers free credit monitoring which also provides users with their FICO Score. There is also a paid version of this same service. However, it’s not necessary to upgrade if you don’t want to.
Note that just like software for your cell phone, FICO regularly updates the algorithm they use to calculate credit scores. The version that Experian shows you is called a FICO Score 8. Lenders may use earlier or later versions depending on the type of loan you’re applying for.
Your Credit Card Dashboard
FICO has partnered with several major credit card companies enabling them to show you your credit score at any time. These financial institutions include:
- American Express
- Bank of America
- Citi
- Discover
- Wells Fargo
There will generally be a link somewhere in your account dashboard. It should be fairly easy to find by either logging into your account from a desktop or mobile app.
Check Your VantageScore
FICO isn’t the only company that provides credit ratings. Their biggest competitor is something called a VantageScore. VantageScore is a joint development by the three major credit bureaus.
Just like your FICO Score, VantageScores range from 300-850 and are meant to predict how likely you are to repay a loan. However, they do place different weights on the inputs that are considered. For this reason, your VantageScore can differ somewhat from your FICO Score.
Lots of credit monitoring services like Credit Karma use VantageScore. It’s also used by credit card companies that weren’t listed above (such as Chase or US Bank).
The Bottom Line
No matter how you prefer to manage your credit, what’s important is to consistently do so periodically. If your credit card provides you with a free FICO Score, then a simple step is to check it on a monthly basis for any tell-tale signs such as a major drop or unexpected fluctuations.
Even if your score is right where you want it to be, it’s still a good idea to review the content of your credit report regularly. If you’re trying to make significant improvements to your credit usage habits, then weekly access to your reports will serve as a big help.
Featured image credit: Unsplash
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