The one thing I have always hesitated to do in life is to get a hold of my credit score. Whether it was based on fear or just plain old procrastination, I always put the task on my to-do list but never actually got to complete it – until now! All the latest news about identity theft and the banking crisis prompted me to take action and find out what my true credit is, and more important is my identity safe! It is time to put those fears aside, grow up, and to learn more about how the credit scoring system works.
Boy, am I ever glad I made that decision!
The old saying about knowledge holding power and setting us free definitely holds true in the credit report niche. I am now so much more confident about submitting an application for loans now that I have knowledge about credit report, FICO scores and understand how the whole system works. In fact, I would now recommend that everyone tests their credit report at least once annually to help shield themselves from identity theft and from incorrect information found on their report that can be modified.
The credit grading system is actually a complex procedure and each of the 3 major credit repositories (Experian, Equifax and Transunion) has a completely different grading model that they use to determine a debtor’s credit score. I learned the hard way the importance of getting all three to get a truly accurate picture of my credit score. For example, some lenders only use one kind of repository, say Experian, while others use a different one, which is a reason why you may have completely different results among the three. Thus, it is imperative to make use of all three repositories.
FreeScore360 enables me to pull a report from every repository independently. This is extremely convenient and avoids me from having to deal with each agency separately. Furthermore, I now have an excellent ‘big picture’ about my credit score and can always modify any inaccurate information to each agency singly in case a problem arises with one of the repositories. Also, keep in mind, that while you can get your credit report entirely free of charge from each agency, you must always pay to get your credit score. FreeScore360 allows me to get everything with one convenient payment so that I don’t have to do three individual orders.
The Smooth Process of Finding Out My Credit Score
Enrollment was very easy; I only had to provide my basic information such as name, email and address as well as fill-in my login details for the membership part of the site. The application is SSL encrypted ensuring that any sensitive data I provided such as my Social Security Number and date of birth used to retrieve the credit data were entirely safe. Security was my number one concern and this was well highlighted on the application page.
The application then guided me through a series of questions, all of which had to be answered in order to gain access to my final report. A valid credit card must also be added, after which $1 is promptly billed as a security measure. This also allows you to gain access to their stellar membership program, which can be cancelled after a 7-day trial. More on that in a sec!
Upon successfully completing the application, I was given a detailed report, which contained my 3 credit scores – one from each of the repositories. The scores can be anywhere from 350-850, with a handy bar graph providing exact details of where I stand compared to the average. Total credit risk was also summarized, showing me how easily I can qualify for attractive interest rates on any future financing. The beauty of this system is that I instantly received 3 reports in one order, which can easily be compared side-by-side, available for one month.
How Your Credit Score is Determined
Many people have always wondered what method these companies use to determine your credit score. It turns out that 35% is based on your payment history and another 15% based on the length of your entire credit history. Other factors such as how much your currently owe in ratio to how much you own as well as your most recent credit inquiries makes up the remainder. Let’s begin with your payment history, which makes up the greatest component of the ‘credit score’ pie.
Your payment history includes any collection bills you may have received from the past as well as late payments, foreclosures or insolvencies. An established history of on time payments and a clean credit history will favorably affect your score and even help to raise them over time. The older the negative history is, the less it will negatively impact your overall credit score.
The second largest factor in credit scoring comes from calculating the ratio of how much credit you have available compared to how much you’ve used up. Having a lot of maxed out credit cards will not be viewed favorably in this section! The perfect credit ratios should be approximately in the 25-35 percent range. Also, the longer confirmed your credit history is, the more favorable better of an impact it will make on your credit score. However, don’t think that shutting down your accounts is a good thing! This can actually have more of a negative affect on your score due to restricting the amount of time that the specific account has been opened. The more established your credit accounts were, the better they’ll rank in this category of the credit score system.
Now, what if you’re one of those people that open new credit accounts at every opportunity they can? The quantity of new credit accounts you’ve opened can have somewhat of a minor impact on your ratings. For example, too many submitted applications for new credit cards can make the impression of having too many ‘uncompleted’ credit lines, which can have a harmful effect on your credit score. Trying to get too many different loans from different lenders in a short time just doesn’t look good and can slightly lower your score as a result. Don’t be afraid to sign up for one or two attract offers now and then. But be sure not to sign up for a different auto loan application every two weeks! Just keep in mind that this rule has nothing to do with when a creditor or prospective employers pulls your credit and you have to put in a new application – this has completely no impact on your report!
Finally, there is an ideal mixture of credit types that you should maintain, such as not having more than 4 credit cards and a healthy amount of other credits. This factor is taken into consideration only very slightly, but can still impact your rating, if you have say, 20 credit cards in your name!
High Quality Monitoring Services
FreeScore360 places a strong emphasis on their excellent monitoring services. Members can get upgraded credit reports and scores monthly, which can give valuable insights into how their scores are doing as time passes by. They also provide plenty of fictitious scenarios that enable customers to view the specific real-life factors that may affect their credit score over time, such as what happens when they miss one payment.
However, the big bonus of regular credit monitoring are the alarms you can potentially get in case any fraud or possible errors are found on your report. FreeScore360 immediately notifies members when any significant changes occur on their credit reports, caused by anything from delinquent payments and payday loans to new account openings or possible criminal records, helping to prevent fraudulent activity before it has a chance to grow out of proportion.
I signed up for the premium features, which also provide me with additional services such as neighborhood watches and sex offender alerts. I highly recommend this service to anyone who wants complete peace of mind regarding any personal finance and safety matters that are now all too often a regular part of our everyday lives.