Most of the people are not aware of their credit scores till the time they approach a lender for the loan or are denied a loan or a credit card approval by any of these financial institutions or the credit card companies.
Credit scores basically define the credit standing of an individual. It forms the basis of the underwriting decisions for the lending companies. Every individual should have an understanding of how the credit scores affect your financial standing.
Understanding the need for the credit score of the people is essential. Given the fact that almost every individual requires financial aid at some point or the other in life, the Federal government has made it mandatory for the credit bureaus to issue credit scores and report to the individuals for free.
Thus one can comfortably get to look at their credit report and scores at least once in a year for free. This means that they will have access to the credit scores from the three bureaus.
One can time the accrual of the credit scores in a way that they have the access to the same almost throughout the year. One needs to understand that the different financial institutions take an average of the credit scores given by all the three credit bureaus namely Experion, Trans union and Equifax in their lending decisions. Thus one needs to check the credit report by all the bureaus to ensure that they are perfect and there are no discrepancies in them.
So the next big question is what to look for in the credit reports and what is the best credit score which one should strive to get?
Credit score is dependent on a number of criteria which are:
- Credit history which consists of the details of all the expenditure up to a certain value
- Payment history which indicates how regular you have been in paying your debts and bills. Regular and timely payments result in better credit scores while the delays and defaults have a wrong bearing on the credit score pulling it down.
- Credit Inquiries: The more the credit inquiries with regards the credit rating the more the chances of it going down.
- The kind of credit one has taken also has a bearing on the credit score.
On getting the credit report one should look at the entries in it and verify if they are correct or not. Wrong entries and discrepancies in the report can downgrade your credit score.
There are various ways of finding free credit score. Understanding the need of the same and growing awareness among the people with regards to their financial standing one can find several online companies offering free credit scores. However, one should be careful in the selection of the companies providing the free credit scores. Check on the reliability and the credibility of these companies. One can check for the reviews online with regards to these companies before selecting any one of them.
There are several companies which trap you into subscribing to their online services wherein they provide the details of your credit report and also threaten that in case you do not do so you likely have a low credit score and will be unable to get loans. One can take the services of the online credit service providers who offer it for a fixed term free of charges and on completion of the same ask you if you would like to continue with them.
Keeping a track of your credit score and frequent check on the credit report can help in eliminating the discrepancies and removing them at the earliest so that you get the chance to maintain a good credit score.