Your credit score plays a substantial role in determining whether you get approved for new credit, such as loans or credit cards, and also affects your interest rate. Thankfully, various online services and financial institutions now enable you to check your credit score for free. It is crucial to frequently review your score to detect and dispute any errors, as these corrections can substantially improve your credit rating. These services allow you to understand what financial activities have positively or negatively affected your credit score and where you can make improvements.
Services may provide either your FICO credit score or your VantageScore. Although both scores assess creditworthiness, they are different. FICO scores are more widely used by creditors and lenders due to their standardized and objective evaluation of credit risk. They have been a reliable form of credit assessment since 1989. On the other hand, VantageScore, introduced in 2006, can give a score for individuals with a limited credit history, generating this score within one to two months of opening their first credit account, which is shorter compared to the six months required for a FICO score.
VantageScore adopts a more forgiving approach in certain situations, discluding medical debt and showing leniency to individuals affected by natural disasters. If your FICO score is lower than expected, it may be beneficial to check your VantageScore, which might be more favourable under these circumstances. It is also worth finding out which credit model is used by potential lenders or landlords and ensuring you are aware of your score.
Never underestimate the importance of frequently checking your credit score and rectifying any errors as this can significantly boost your score. Aim for a credit score of at least 670. If your score needs improvement, make a point of paying down debt and ensuring other payments are made on time. Try to avoid applying for any new credit until your score has had a chance to improve, which may take several months.