Wondering if you should be paying to check your credit scores and if there is a free option? This should be a helpful guide for you.
Credit scores are helpful when you are seeking loans, renting apartments, or even during mortgages. Most consumers look at their credit scores at the very last moment when they are in need of urgent money or a loan to cover some basic yet important expenses. The best habit is to keep a monthly check on credit scores so you can start working on improving them for bad times.
But do you have to pay to check credit scores? Well, not really, but also a yes. Let me explain it to you with more clarity.
Also Read: What is an Average Credit Score for Auto Loans
Should You Pay to Check Your Credit Scores?
There are a few tools that let you check your credit scores for free. These are mainly financial institutions and organizations that cooperate with federal law or have a sub-product to sell with credit scores. Apps like Credit Karma also offer you a quick eye on your credit scores from TransUnion and Equifax for free. Moreover, credit bureaus themselves also offer you a free look at your credit scores, but they might come with some terms related to them. Credit Sesame and major credit card companies such as Discover, Barclaycard, Captial One, and a few more also offer free credit scores at their terms and services.
Most of these services offer credit scores for free. But what if you are looking for a particular kind of credit score, like VantageScore or FICO score?
FICO scores are widely used for various financial applications, and lenders may prefer using them in most cases. Besides, there are around 30 FICO scores, and financial institutions might not be able to provide them all. In such a case, you can prefer using a paid service, such as myFICO, which is a consumer division of Fair Isaac, the company that invented FICO. In fact, as per FICO, 90% of lenders use FICO for creditworthiness and analysis. So, you are left with minimum options and have to get FICO scores for most lenders. Also, checking your FICO score might not hurt your credit score using myFICO, as per the credit monitoring service.
So, it depends on what kind of credit scores you are looking for. If it is just the credit scores, you have a bunch of options, but if you are looking for something specific, then you might have to pay for it (at least in most cases).
What Factors Should You Consider When Choosing Credit Score Services?
Now that we have both the free and paid credit score options on our table. Which one should you pick and why?
The prime factor for me when I consider a credit score model is how accurate the data is and does it come from a reputable source. If your credit scores are just numbers and do not relate to genuine references, they wouldn’t make any sense. Also, it is necessary to look at what the lenders are using to analyze your credit scores. If both the credit score models are different, then it is no use to get one that the lender does not use.
The second factor is to look at the extra features that come along if it is a paid service. In such a case, it is somewhere okay to pay for paid credit scores as they come with added value. For instance, credit monitoring, score monitoring, identity monitoring and restoration, and extra tools that come along with myFICO make it better for the price you are paying.
Other factors depend on individual choices, and they can vary between individuals. However, accuracy and added value are two factors to look out for when choosing a credit score model.
Also Read: 10 Tips to Avoid Credit Card Skimming Fraud: Let’s Play it Smartly
Why and When Should You be Checking Credit Scores?
Credit scores are important financial tools in our everyday lives, and one of the most common mistakes that most young, old, and new consumers make is not monitoring their credit scores.
Credit scores and reports tell us a lot, like if there has been an identity theft and someone else is leaving their charge-offs on your account. Or if there are unknown inquiries or debit entries from an old address that you no longer live at or an account that you no longer manage. Sometimes, creditors mistakenly place a cleared account with debt. You get to know all such negative items on your credit report and how they are impacting you when you regularly monitor them.
Monitoring credit scores is also a good practice when you want to keep your scores high in times of emergencies. The harsh truth is if your credit scores are low, lenders will charge you higher interest rates at more difficult terms and conditions. This will only lead you to a debt trap. One of the factors I mentioned in my handy self-credit repair guide, “Space Shuttle Strategy,” is to always maintain a good credit history and make timely payments. You can observe all these and try keeping your scores high so you always get the best deal when you want to.
I suggest you keep checking your credit scores every three months (You can do it with myFICO as one of the monitoring tools with such a facility). This is because if you have disputed a negative item, the investigation to complete and reflect on your credit report can take some time. Also, you can keep creating dispute letters while you have time, as disputing is a long process and may not be helpful when you are short on time.
Improving your Credit Scores
Once you have your credit scores, the next best thing to do is follow the best practices to keep the scores up. This includes credit utilization ratio, timely payments, disputing negative items, adding authorized users to your credit profile, and much more.
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You can know it all in my handy self-credit repair guide – Space Shuttle Strategy.
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Also Read: How to Start a DIY Credit Repair Business? A Detailed Guide
Frequently Asked Questions [FAQs]
No, you don’t necessarily have to pay to check your credit scores. Several tools and financial institutions offer free credit score services. Apps like Credit Karma, credit bureaus, and major credit card companies provide free access to credit scores. However, if you are looking for specific credit scores like FICO scores, you may need to opt for a paid service like myFICO.
Regularly monitoring credit scores is essential to identify any potential identity theft, incorrect account information, or negative items impacting your credit. It allows you to take timely action to resolve issues and maintain a good credit history. Checking your credit scores every three months is recommended to stay proactive in managing your credit and preparing for any potential disputes or improvements.
Credit scores play a significant role in loan approvals and terms. Higher credit scores generally lead to more favorable loan terms, including lower interest rates and better conditions. Conversely, lower credit scores can result in higher interest rates and less favorable loan terms, potentially leading to increased financial burdens.
Yes, you can improve your credit scores by practicing responsible financial habits. This includes making timely payments, keeping credit card balances low, maintaining a diverse credit mix, and disputing any errors or inaccuracies on your credit report. Monitoring your credit scores can help you track your progress and take necessary actions to improve your creditworthiness.
Wrapping up: Should You Be Paying to Check Your Credit Scores
This pretty much wraps up my simple and basic guide on whether you should be paying to check your credit scores. There are many free options that help you get credit scores for free, but what is important is whether you are using the same credit score model that lenders use. myFICO is still one of the best-paid choices, and it comes with added value and features along with credit score monitoring.
Once you have your credit scores, you can always do better at it with a strategic approach towards improving them. You can refer to my handy credit repair guide, the Space Shuttle Strategy.
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