Credit scores, credit reports, credit bureaus — you hear these terms thrown around on TV commercials, but what do they really mean for you?
Think of it like this: your credit score is kind of like a quick snapshot that shows lenders your financial reliability. It affects your ability to get a loan and determines how much you will have to pay to borrow money.
The most reliable and widely used credit score is the FICO® score. It is used by 90 percent of lenders, so this is the credit score you should always look to pull. FICO scores range from 300-850 — the higher the score the better.
Where can you find your credit score?
That’s where the credit report comes in. The Federal Trade Commission allows every person in the United States one free copy of their credit report every 12 months. That includes one report from each of the three nationwide credit reporting agencies — also called credit bureaus — which are Experian, TransUnion and Equifax.
What’s the difference between the three bureaus?
Each bureau serves the same function (to keep information about your credit history) but they remain independent of each other, sort of as a way to keep the whole process honest. They generally all have the same info on you but not always. That’s why the individual credit scores can differ from one another. You can pull all three reports at once to get the clearest picture of your overall credit health, or you can stagger them over the course of the year to see how your credit score has fluctuated and keep an eye on accuracy.
Where should I pull my credit report?
The only authorized website where you can obtain your free credit report is annualcreditreport.com. Since you will be providing personal data like your social security number, it’s imperative that you use a trusted site for this service and this resource is recommended straight by the US government.
Keep in mind that you can only pull your credit report if you have accumulated enough information. That means you must have at least one account that’s been opened for a minimum of six months and at least one account that has reported to a credit bureau within that timeframe.