How To Check Your Credit Score?

Your financial life determines your major life decisions and a strong and stable financial life is largely reliant on your credit. Therefore, the most important number that you will come across is your credit score.

Your life revolves around how much credit you have in your possession.No matter how kind-hearted you are and how intelligently you deal with various situations that life mischievously throws at your disposal but one thing that remains unchanged yet a bitter part of the real world and that is how much credit you have.

The credit amount you have determines your status as someone to be given any degree of respect in the society or not since we live in a society that is very materialistic in its behavior and working where people worship the rising sun (metaphorically) and no one bows down to or pay attention to anyone who has not what it takes to purchase the best amenities of life.

This has become a deep seated understanding now amongst different sections of society that your worth can only be gauged and measured now in terms of finance regardless of your good morals and principles. Principles and morals are seen as abstract conceptions devoid of practicality and pragmatism which have become the driving forces of today’s age and time.

Everyone today is more concerned about how much you are earning, how many digits are on your pay cheque and if your house or abode doesn’t have the grandiose they expect people to have in a certain class then you can be deemed in no time a class outcast or a pariah because of your ailing financial health.

World has become more materialistic and less benign and benevolent in recent years owing to a rise in plethora of economic crises and issues of global nature following the 2008 recession as well as the recent outbreak of a pandemic shattering the hopes of an egalitarian world with a level-playing field for everyone. Therefore have a decent amount of finance and spend reasonably and save more so that you can have a better credit score since in today’s age and time it’s your credit score that matters most.

Your morality score is appreciable but it is not something tangible so you can’t feel its presence in your life and the same cannot be said for your credit score which is out there in a very existent shape and form and you can manoeuver it without any trouble by employing life strategies to increase your fortune manifold.

So what is a good credit score? Although there are different ranges which are for sure dependent on a particular kind of credit scoring model, generally speaking credit scores from 580 to 669 are considered to be fair; 670 to 739 are considered as good; 740 to 799 are considered very good; and 800 and more than 800 are considered as excellent scores.

How does a credit score work?

What is a credit score?

Credit score range has an important variation factor that has to be taken into deep consideration before understanding its exact nature and working. This variation is predicated on the model that has been used (FICO vs VantageScore) as well as the credit bureau (Equifax, Experian and TransUnion) since these are the ones responsible for pulling the score. The ratings traditionally are centered around a classification which has an inclusion of labels as disparate as bad/poor, fair/average, good and excellent/exceptional. The rating you are receiving as a law-abiding and tax paying citizen of this country which is a leader of the world economy is largely dependent on your credit score.

Types of credit scores

There are two predominant models of undertaking the scruple-requiring and careful process of credit scoring: FICO and VantageScore. Out of these two big names entailing numerous connotations with them, one has a clear audacity to delineate that it is only here where lenders have exhibited a substantial amount of preference towards FICO since it is a model which is not just good in theory but is also in an effective practical application and use. Numbers don’t lie and this has been exhibited in the very fact that this model is in significant usage in more than ninety percent of lending decisions made in the US.

FICO and VantageScore credit scores share a greater degree of similarity and this similarity is demonstrated with utter lucidness in the respective scores having a range that starts from 300 but is not confined to it since it goes on till 850. At the same time, it is the payment history which remains a crucial factor in how the score gets determined but one can’t get lost in this similarity and at sudden without any qualms being there start jubilating about it, incognizant of the difference that is also an important and undeniable part of this picture. The difference comes in with the notion that how these credit score models are going ahead with the conception of weighing as well as with the idea of ranking several other factors.

Best way to check credit score

Credit scores have a different way of undergoing the highly pivotal process of calculation which is a major determinant of your finances, it is indeed your prerogative to check your credit score but the only way you can check it is related to your calculation capabilities which mean your mathematical and arithmetic skills come into play here.

You don’t have to ascend to the heights of advanced mathematical skills such as calculus or trigonometry to comprehend the calculation that is involved here as the only calculation you require here concerns the world of finance in an easy yet specific manner as your concern here is confined to the dimensions involved with FICO Score and VantageScore which are the key and standard models for checking credit score.

To better understand the phenomenon involved here are the key factors FICO and VantageScore consider.FICO Score considers Payment history, Amounts owed, Length of credit history, New credit and Credit mix. These are the multiple standards which dictate the FICO Score policy when embarking on a credit score calculation here. Out of these, it is the Payment history which has the largest share of work at a percentage that stands around 35%.

This notion corresponds to your desirability only if you are someone who is a meritorious person and has paid the past credit accounts on time without any delay or anything unpleasant being done in the given time. If you go for delaying and postponing such important commitments to important score measuring mechanisms then your financial future stands a good potential of suffering from bleak bouts of depressive waves. Delay implies your lack of punctuality as well as your lack of seriousness towards a task that you should be deeming as something significant enough to move ahead with in your life.

A situation where there is a delay that has been caused by you can be a cause of upheaval for your name, your professional and financial life as well as for your understanding of the worldly matters in a more coherent and congenial manner since a delay can brutally damage your mutual relations with a circle of friends you have or the professional circle of bosses and superiors you report to. In a same way, credit score also examines situations with delay very carefully therefore it is pivotal that your delay does not come into play for damaging your rapport as well as your credit score related dealings and matters.

Secondly, FICO Score comprises Amounts owed which are thirty percent of the entire score related model. These Amounts owed signify a very crucial aspect that is the total amount of credit and loans in your use being put in a comparison to the total credit limit that you have there which is also known as the utilization rate one has but to keep things simple and understandable keep on clinging to the gist here. The gist lies in the comparison which is being carried out with regards to the total credit limit.

Thirdly, the length of credit history comprises fifteen percent of the total score calculation process as here what matters has to do with the length but of time not of anything else. That length of time is also of the period when you had the credit since here everything is revolving around the credit so it would be unnecessary to deviate from the credit as the focal point of our discussion. It is not debit but credit that we are concerned with in this article’s discussion.

There is a fine distinction between the credit and the debit and this fine line remains impregnable thanks to the generous contributions of financial analysts acting as pioneers in the early years of the evolution of this sector. Without any iota of doubt, this can be said with utmost clarity that a debit is “an accounting entry that either increases an asset or expense account, or decreases a liability or equity account”. But when it comes to credit it has to be said that it is an accounting entry that has the potential to either augment the increase in a liability or equity account, or accelerate the process of decrease of an asset or expense account. Keeping in account, credit is positioned to the right in a typical accounting entry.

Simplistically speaking, debits (dr) is concerned with recording of all of the money that flows into an account, but credits (cr) does the opposite by concerning itself with the recording of all the money that flows out of an account.When an individual resorts to the usage of a debit card, the funds for the amount dedicated to that person’s purchase are taken from their checking account in real time.

But in case of the usage of a credit card, the amount will be charged to the individual’s certain line of credit, implying that person is required to make a bill payment at a date later than the one which is already here you will pay the bill at a later date therefore a person gets more time to pay and does not have to cope with the hassle of a rush that does nothing other than giving you a toxic adrenaline rush piercing through your veins and arteries a sense of anxiety and panic highly hazardous to your overall well-being and health.

Fourthly, the standard you have to follow as a part of FICO Score is the New credit which comprises ten percent of the entire process hence it concerns itself with the extent to which you are willing to go for applying for as well as for opening of new accounts. The application and opening process of new accounts is a crucial step here that cannot be neglected at any cost whatsoever.

And last but not the least, we have Credit Mix as the remaining ten percent component of the entire process since it is predicated on the disparate range of credit products you have in your possession and these possessions do not include your hamburger you just bought or the beer you are chilling in your fridge for the party tonight rather these possessions denote your installment loans, the credit cards you have, as well as the accounts of finance company and things don’t just stop here so the scope is not limited. The scope and content we are trying to cover here is broad and also include mortgage loans and furthermore.

On the other hand, VantageScore also has many key tenets, first being the one giving the label “Extremely influential” meaning it has to do with your payment history. Second being the tag “Highly influential” it has to do with not just the type but also with the duration that credit has and also incorporating the percentage of credit limit being used. Third tag is “Moderately influential” which encompasses “Total balances” which also mean that we will have debt too in this equation ( don’t get confused not a mathematical equation you hated in your Grade 5 class but the kind of equation that makes your fortune shine in front of the state as well as the credit scoring authorities).

How to check your credit score without lowering it

Just remember wherever a person’s credit undergoes checking, an inquiry gets duly noted on their credit report. Their credit score is different from their credit report. A credit report is more inclusive and wholesome in its view of credit in a way revealing information in a detailed manner about the individual XYZ’s credit activity as well as the current situation of credit.

Credit reports put together a concrete understanding of information that is personal in nature to an individual such as their name, address of their residence and most importantly their Social Security number but further on in the same credit report we get to know about credit accounts which are concerned only with the history of your payments, the limit on your credit and the balance you have in your account.

Also the credit report has public records such as liens, foreclosures as well as the bankruptcies ( no one wants them but they come out of nowhere sometimes like an unwanted child in an ailing marriage) and lastly the inquiries into your credit are included here too. There are three main credit bureaus responsible for issuing these credit reports and those are Experian, Equifax as well as the TransUnion. It is important that you continue to review the credit reports which are out there as they are definitely related to your credit scores and are not their distant relatives for sure. The credit scores can also be seen as proxies to credit reports.

Now is the time to return from making you literate on credit reports ( since they are an important part of this educational article), so it depends who is the person making a check on your credit and why they are checking it therefore in this framework and arrangement any inquiry of this kind will simply go down the lane of classification as either a soft inquiry or a hard inquiry.

To get rid of your concern that whether your credit score will be lowered and how drastic the impact is going to be, just keep in mind one thing and that is soft credit check and inquiry doesn’t have the potential to bring a decrease or reduction in your valued credit score but it is the nefarious hard credit which hurts the most and the worst as it reduces your credit score so not going into situations leading to a hard crest check is advisable if you really want to protect your hard earned and precious credit score.

If you have ever undergone financing as well as a credit option where the lending party did a check of your pertinent credit score as a part of their job which requires this process. What just happened here and what you had just undertaken was the part and parcel of the scheme known to the world as a hard credit inquiry.

A hard inquiry is also known by the name sounding very aggressive too and that is “hard pull” ( no surprise though considering the stress this inquiry and check carries). Such inquiry by a lender involves the very person executing the process also making a highly significant note of the official review conducted in the credit reports of the customer and credit-relevant person like you. Lenders utilize the aforementioned set of information to appraise how your former credit handling process and by former we imply here the past experiences.

Lenders are dealing with information that is certainly concerned with the degree to which you’ve been punctual and regular with regards to the payment of your debts as well as that of bills in a more timely manner.

Here even the derogatory marks on a person’s credit reports have a significance that cannot be discounted for in terms of the harm it may inflict on a person if finds himself trapped in this since this leaves a bad impression to anyone coming to or planning to come to your financial rescue in circumstances which are tough and can get testing either due to downturns of the national economy or merely because of the peculiar nature of your unemployment.

These lenders can get as horrific as Krueger from Nightmare on Elm Street to you when it comes to them getting very particular about their terms with you. Their point of inquiries will also range from questions about how much credit you have out there and it’s been how long since you are in the possession of this creditor in more clear words in management of the respective amount of credit which you claim to be yours.

From this information, creditors can execute some serious decision-making which lies in the important question of whether they should extend new credit to you or should proceed with the giving of additional credit to you.

You can get yourself prepared beforehand for a hard credit check by doing a task as simple as that of mere monitoring on your own your credit reports and ensuring the absence of any derogatory marks there which may turn out to be unpleasant surprises for you if not looked at and given consideration on time. When you check your credit reports you are undertaking a soft credit check.

When you check your credit score on your own then you are obviously without any shred of doubt being there undertaking a soft credit inquiry also commonly known as a credit check so by just checking the credit score it won’t get lowered. Let your worries fly now and relax. Hurrah! There is now no more time to sweat over the potential lowering your score can suffer, remember the tip soft credit check is fine but just stay cautious of the hard one.

Conclusion

The very nature of credit score makes it a highly engaging and conversation provoking topic amongst the bigwigs of the finance sector therefore how to check it becomes a point of concern and of interest for many. But the whole thing trickles down to how correctly you are checking it devoid of any sort of prior apprehension being there to dissuade you from embarking on the process.

Charles Bains

Charles Bains

Charles Bains started his insurance career as a marketing intern before pounding the pavement as a commercial lines agent in Orlando, FL. As an industry journalist, his articles have appeared in a variety of trade publications. His insurance television career, short-lived but glorious, once saw him serve as the expert adviser on an insurance-themed infomercial (yes, you read that correctly). Having recently worked for various organizations, coupled with his broader insurance knowledge, Charles is able to understand our client’s needs and guide them accordingly. He is a gem for Insurance Noon as his wide area of expertise and experience have been beneficial in conducting further researches to come up with solutions and writing them in a manner which is easy for everyone including beginners to comprehend.