What is a FICO Credit Score?
A FICO credit score is offered by the Fair Isaac Corporation and it is a three-digit number that indicates your creditworthiness. This score is calculated by credit reporting bureaus based on your credit report. The three main reporting bureaus namely Experian, TransUnion, and Equifax may give you different credit scores since their data may be different but the difference is always negligible. FICO Credit scores are used by lenders in almost all lending decisions. Most lenders have a credit score range for their credit packages.
The FICO credit score ranges from 300 to 850, and the higher it is, the more creditworthy you are. The FICO credit score is calculated based on your credit history and your credit cards. When your credit score ranges from 850 to 800, you are considered to have an exceptional credit score. People with such scores are able to access more credit facilities at lower rates. Creditors are more willing to offer them credit since there is a very high possibility that they will pay back the credit on the agreed date. About 20% of the United States population have such scores.
If your credit score ranges from 799 to 740, your score is very good. Most often, people with such credit scores are able to access the credit facilities that are available to people with exceptional credit scores. 25% of the American population has credit scores that fall within this range. A good credit score ranges from 739 to 670. Most people with this score also have access to many credit facilities. They can access most of the packages that are available to people with excellent credit scores. 21% of the American population have this credit score. The national average is 700 which falls within this range.
If you have a credit score that ranges from 669 to 580, your score is considered to be fair. People who fall within this range have limited access to credit. The rates on their credit packages are higher than that of people with good credit scores. Lenders are not very comfortable offering them credit since there is a low possibility of them paying back. 18% of the American population have this credit score.
The last category is that of people who have a credit score that ranges from 579 to 300. A credit score that falls within this range is considered to be very bad. Credit packages that are accessible to people with such credit scores are characterized by very high interest rates.
Why Do Credit Scores Matter?
As mentioned earlier, credit score influences all lending decisions. Your rates and accessibility to loans, mortgages, and credit cards depend on your FICO credit score. Due to the importance of credit scores, you should be checking them. When you check your credit score, you will know if it needs improvement or not. You can also notice issues such as errors and identity theft when you check often.
Although credit reports do not include credit scores, they will give you all the information that FICO uses to calculate your score. Hence, it is important to check your credit report. You can get access to a free copy of all three credit reports from annualcreditreport.com. You can access one free copy each year.
Where Can I Find Free FICO Credit Scores?
If you want to access a free credit score, you should be cautious about all the information floating about. Some are presented as credit scores, but they are not the ones you need to check out. We have compiled a list of the places where you can get access to a free credit score.
The easiest place to access your credit score is the Discover Credit Scorecard. With this option, you do not need to be a Discover customer to access this card. Discover uses data from Experian to calculate this score. you can just register and get access to your official FICO score at no cost.
You can also access your FICO credit score and Experian credit report from freecreditscore.com. This site used to request for your card information before offering you your score and report. Now, things have changed and you do not need to submit your credit card information before accessing the information.
Every bank offers credit scores and they pull the data from one of the credit reporting agencies. It could be TransUnion, Equifax, or Experian. Since they report from one of the three agencies, banks present varied credit scores.
Here are banks which offer free credit scores.
The following banks pull the information from Equifax.
You can access your credit score when you sign up to any of the Citibank credit cards. This offer is only available for credit cards you get from Citibank. Citibank cards that are provided by other brands by Hilton HHonors and American AAdvantage are not included. The credit score is available monthly. You can access it on your online account or the bank’s app called the Citi App.
- DCU Credit Union
Once you have any credit card or checking account with direct deposit from this bank, you can access an Equifax credit score. The credit score is updated monthly and you will find it in your online account.
People with revolving lines of credit, active checking accounts, and installment loans from PenFed have access to a free FICO credit score. There is no schedule for updating the credit score but their account gets updated any time PenFed refreshes the account. You can access the score from your account. When you log into your account, you will need to click on “Your FICO score is ready” and you can see your score. You should note that PenFed uses a different scale in calculating credit scores. Their scale is called the “Next Gen” FICO Score and it measures scores from 150 to 950. This means that the scores will be different from that of the traditional score.
- Huntington Bank
When you sign up for the Huntington Voice credit card, you can get access to the Equifax Bankcard Score 2. You will see a link to your score when you log into your account.
You can access credit scores that use data from Experian if you get cards from these financial institutions.
- American Express
You will get access to your FICO credit score if you sign up for any American Express credit card. The scores are updated monthly and you can access the score anytime you log into your account.
- First National Bank of Omaha
You can get an official credit score with any credit account from First National Bank of Omaha. The scores are updated monthly and you can see your score when you log into your account.
Credit scores are available with any Chase Slate account and they are updated at the end of every month.
- Wells Fargo
You can access your credit score when you have a Wells Fargo credit card. Any of the Wells Fargo credit cards are applicable.
- Bank of America
Unfortunately, not all Bank of America credit cards can offer you this service. However, if the card makes your credit score available, it will part of the descriptions. The information is updated monthly. When you log into your account, you will find a link to your credit score on the account summary page. The account summary page can be found under the “tools and investing section”.
- Walmart/Sam’s Account
You will get access to your official credit card when you have a Walmart MasterCard, Walmart Credit Card, or Sam’s Club Credit Card. You will get an updated score every month. You will need to enroll in the online delivery of monthly statements.
When you sign up for any Barclays credit card, you can get a monthly access to your credit score. The link to your credit score information is available on your account summary page.
How Are Credit Scores Calculated?
There are several things that are considered in the calculation of a credit score. When you know what influences your credit score, you will know what to do to maintain a good credit score.
- Payment History
Your payment history is one of the most important components of your credit score. Your history reveals how you make payments. If you make payments on time, it will have a positive effect on your credit score. In the same way, missing payments lowers your credit score. You should avoid late payments as much as possible. It is recommended that you set up an automatic bill payment so that you do not miss a payment. Your payment history makes up a huge percentage of your credit score. It accounts for 35% of your credit score – that shows how important it is.
- Length of Your Credit History
Old credit accounts have positive effects on your credit score. However, when credit scores are being calculated, they also consider the average age of all credit accounts. This is why people are advised to be cautious when they decide to open several credit card accounts within a short time. when you do this, even if you have older accounts, your credit score lowers. The length of your credit also accounts for 15% of your total credit score.
- Credit Utilization Ratio
The credit utilization ratio is the ratio of your total balance to the credit used. If you have a high revolving credit, your credit utilization ratio will be low. It is advisable to keep your credit card balances low every time to improve your credit utilization ratio. If you constantly max your credit card, you are going to lower your credit score badly. The amounts of debt you owe which influences your credit utilization ratio accounts for 30% of your credit score.
- New Credit
Many financial experts recommend that when you want to shop for a new credit, do all your hunting within a short period. This will be considered as one inquiry. If you apply for them within long intervals, they will be considered as separate inquiries and they will each impact your account negatively. If a credit card company need to conduct an inquiry, request that they conduct a soft inquiry since hard inquiries negatively impact your credit score. New credit accounts for 10% of your FICO credit score.
- Credit Mix
When calculating your credit score, the number of accounts you have as well as the types of credit you have influences your credit score. If you are able to manage several credit types such as revolving lines of credit, mortgage, and installment well, it will have positive effect on your credit score. People who have different types of credit on their credit report have a better credit mix and that is beneficial during the calculation of your credit score. Your credit mix contributes 10% of your credit score.
It is necessary to check your credit score to make sure there are no errors. Since you have access to all three credit reports once a year, you can check them in four month’s intervals. For instance, you can check your TransUnion report at the beginning of the year and then check your Experian report in the next 4 months. Remember to scrutinize your reports for errors. If you find any error, remember to file a dispute.
FICO can offer you your credit score but it is not for free. They charge $60 for this but it is worth it since they add your full credit reports to the package.