Are you one of those people who is constantly afraid of a credit score check? Does even the mere mention of said score spike your anxiety and make your heart raceup? Then this post is for you!
We understand it can all seem a little overwhelming. The first thing to know is no harm from running a credit score check. Knowledge is power. If you’re committed to becoming financially stable, you need to know where you’re starting from. The more information you gather the better your outcomes.
A score check is an essential step to most financial transactions and applications across America. We’ve prepared this article to help demystify credit scores so you can approach the subject with confidence and lose that fear once-and-for-all.
What is credit score exactly?
The credit score is a number that measures how likely it is for a person to pay back a loan or any kind of moneylending. In other words, the number estimates each consumer’s creditworthiness. Generally “good payers” develop higher credit score numbers, whereas “bad payers” develop lower credit score numbers.
The credit score number is always between 300-850. Consumers are divided into four basic categories: Bad (300- 629), Fair (630-689), Good (690-719) and Excellent (720-850). According to some polls, around 61% of Americans have a Fair Credit score or better. Of course, this means that nearly one-third of Americans are below the fair level.
Almost every time you apply for a loan or any kind of moneylending, a credit check is required. The conditions for the loans depend on your credit number. High numbers are offered better rates and payment conditions.
When you apply for a loan, the money lending institution will run one of two different credit checks, either a Soft Credit Check or a Hard Credit Check. Soft credit checks will not affect your credit score, but hard credit checks can impact your score in certain cases, so it’s best to know your options and get ahead of it.
How to check your credit for free!
The three biggest credit agencies are required, by the US government, to issue annual reports on every consumer’s credit history. All reports are made available for free, so you can have a free credit score check.
To access your credit reports, visit AnnualCreditReport.com. In your credit reports, you’ll find valuable information about your spendings habits. This allows you to know exactly what to change in order to improve your score.
On the Annual Credit’s page, you can request a copy of your credit reports. For this, you’re required to follow three simple steps: 1) filling out a form; 2) choosing the credit agency, and 3) answering some questions about your buying habits.
You can also find other options of free online credit score check. Some webpages offer easy and simple step-by-step processes that allow you to check your credit score and obtain other important information about your credit history.
What is my credit score after all?
As you’ve learned, your credit score is examined at every credit score check. Your credit score is determined by five basic indicators. Each of them is evaluated and considered on your credit reports. They represent different shares of your credit score. The division is made in the following way:
- Payment history: This represents 35% of your credit score. It considers how many payments you have missed, how many defaults, how many loans are active in your name and more.
- Current debt: This represents 30% of your credit score. It considers how much money you owe, how many credit cards you’re currently juggling, and your total current debt.
- Length of credit: It represents 15% of your credit score and considers your whole credit history. People with a long history of borrowing money and paying it back on time have higher scores.
- New credit: It represents 10% of your credit score. It considers how many loans you have applied for in the past. The new credit indicator is similar to the length of credit.
- Types of credit: This indicator also represents 10% of your credit score. It considers all different types of credit you’ve applied for in the past. All your debt is considered, such as car loans, home debt, mortgages, credit cards etc.
But knowing how a credit check works is not enough, we’ll also share with you some essential hints on how to build a good credit score. Keep following it to learn all about it.
How to build a good credit score
Based on these indicators, now you can have a good grasp on how to build a good credit score and not be afraid of a credit score check. In short, you have to be a good buyer and very responsible with your debt. People with good scores are very careful with their finances and constantly avoid financial slips.
If your score isn’t the best and you consider yourself to be in the growth stage, then there are some actions that can help you in becoming more cautious and prudent with your financial decisions. These actions will help you to prepare better for a credit score check. This is what you can start doing:
- Keep track of your spendings;
- Avoid buying unnecessary things;
- Check your credit cards monthly;
- Save money;
- Improve your financial knowledge through books, podcasts, seminars, and the like;
- Check your annual credit history report;
- Develop good financial habits;
- Pay your bills in due time.
OneBlinc is enough!
If you’re looking for a company specialized in helping people overcome their financial burdens, OneBlinc is the best option for you. At OneBlinc, you’ll find all the assistance necessary when applying for loans and other financial products (there are even very special conditions for federal employees).
Unexpected things happen more often than we would like them to. That’s why OneBlinc is here to help, whether you have an emergency or just need that extra cash to go through the end of the month. We believe in people, and we understand that everyone might need money someday, somehow.