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What is a Free Credit Score?

Your free credit score is a number that sums up your current credit rating and announces to lenders how credit-worthy you are. Your credit score is used by everyone from banks to auto dealers to landlords as a way to quickly assess their risk in lending. The credit score scale runs from 349-849 with 723 being the national average. If your score is below 640, you will probably have difficulty finding a good loan. A recent study found most Americans have no idea what their credit score is.

How is a Free Credit Score Created?

Your credit score is created from information in your credit report, including how much debt you have, your debt-to-income ratio, your current balances, past payment history and many other variables. Each credit bureau uses its own mathematic formula to crunch all this data and arrive at your credit score. Your scores at all 3 bureaus will probably differ slightly because not all creditors report to all bureaus. Most lenders pay to see all your scores so that they have a complete picture of your history.

Why is the Credit Score Free?

Actually your credit score is never free. TransUnion, Experian and Equifax credit bureaus all charge you to see your scores, even when your credit report is free. That’s why the 3-in-1 free credit score is so valuable. You receive all your scores and all your credit reports quickly and conveniently. All you do is sign up for a free trial of credit monitoring for 7 days. You may cancel at any time, but you’ll always keep your reports and scores.

How is a Free Credit Score Used?

Your free credit score determines much of your financial life, whether you realize it or not. The scores are not only used to determine whether you receive credit, but sometimes as a personal assessment of your character. Credit scores and reports are often pulled when you are being evaluated for a job or an apartment lease. It may not be fair, but it’s reality.

Your credit score is used for many things including mortgages, home equity loans, auto loans, store charge cards, major credit cards and insurance quotes. If you have a good score, you can negotiate with lenders for better terms and interest rates.

Are Free Credit Scores Ever Wrong?

Because your free credit score is a mathematical evaluation, it’s only a reflection of your credit report. Credit reports often contain multiple errors, so in that sense, your credit score may not be a true representation of your credit. The best defense is to check your credit reports regularly for errors.

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