This post is sponsored by CreditRepair.com. All opinions are 100% our own.
It seems like everywhere you turn nowadays, one company after another is advertising “free credit score access” if you use their credit card, bank account, or other services.
Which might leave you wondering: what the heck is a credit score, what’s my credit score, and why is this even something I should care to know about?
Generally speaking, your credit score will fall on a sliding scale somewhere between 300 and 850, with 850 being considered a perfect score. This score is the way that lenders can quickly and easily gauge your “creditworthiness,” or your ability (and reliability) to pay back whatever amount they loan to you.
What is a credit score?
As mentioned above, your credit score is a number from about 300-850 that indicates, in a nutshell, how good you are at managing and paying back your “IOUs.”
If you put $200 on a credit card but never pay it back, or if you always pay late on your credit cards and other loans, you’ll have a lower credit score.
If you put $4000 per month on a credit card and always pay your full statement balance on time, or if you pay off a 4-year car loan in just 2 years, your score will increase because you’re proving that you are responsible with your money and that you’re prioritizing paying back the money you owed.
Why should I care what my credit score is?
Unless you’re able to only pay cash for everything that comes up in life, there’s a very high chance that you’ll be looking to borrow money at some point, either by using a credit card, taking out a mortgage, or maybe financing a used car purchase, as the most common examples.
I’ll be blunt: If your credit score is only 400, you’ll likely not qualify for a mortgage to buy a $250,000 house, unless perhaps you make millions of dollars per year.
If your credit score is 800, chances are good that you’ll have no trouble getting the best available rates on whatever type of credit you’re looking to apply for, including those coveted 0% APR deals on brand new car purchases.
The long and short of it is this: knowing your credit score gives YOU the ability to gauge your financial health.
A very low score most likely indicates a high level of debt, possibly poor payment habits, and more difficulty in getting your debts paid off.
A very high score typically indicates that you’re doing a great job managing your money and you’re using credit responsibly to make your financial life easier and less stressful, should a larger loan need ever arise.
How can I find out what my credit score is?
Many banks and credit card companies offer access to your credit score for free these days, and some credit cards even act as credit builder accounts to help tie it all together.
The only trick is that there are a few different ways your score is presented — there are 3 different credit reporting agencies (TransUnion, Experian, and Equifax), and then there’s also a FICO score.
Your scores will be measured against similar metrics from the three agencies, but the FICO score is sort of a combination of the three, to give a better overall picture.
This is also the score most commonly used by lenders, so this is the one to pay the most attention to when gauging your own financial health.
It’s also likely that the score your lender pulls is different than the one that you can access online, so keep that in mind when you’re judging your own credit-worthiness.
You can also find out your credit health by pulling your own free credit report from any (or all) of those three agencies every 12 months.
You’d be wise to rotate between all three once every 4 months to keep close tabs on things. Use this report to address any potential bad marks against you or to catch potential identity theft as early as possible.
If you find problems with your report, getting help to get them resolved quickly and properly is a smart move.
Working with a company like CreditRepair.com is an excellent way to ensure that any issues are addressed, resolved and that you’re protected from harm to your credit score during the process.