Where Do We Start?

If you want to change something, you start by measuring it.

So let’s find out what your credit score is, today, and decide what you want it to be in two, six, and twelve months from now.

The law requires that  the three credit reporting agencies allow you free access to you credit reports once each year, but those reports do not include credit scores. If you want to know your score, each agency is willing to sell you that information.  However, your credit scores are now available for free from number of different sources.

When you start looking into this, you will quickly learn that there are actually two basic scores, FICO and Vantage, and three underlying credit reports, Experian, Equifax, and TransUnion, which means that on any given day you actually have six different credit scores to monitor. (Actually, much more than six, but let’s try to keep this simple.) For our purposes, you can just pick any one of them to monitor and improve, and the rest should trend in the same direction.  (One caveat: if you are working on your score in anticipation of a future transaction, like a car purchase in six months, find out which score and reporting agency your lender uses, and monitor that score.)

Where can I find my credit score?

A few credit cards offer credit score information to their customers.  Discover, Barclays Bank, Capital One, and others, offer monthly scores to customers.  Capital One offers it’s CreditWise service to noncustomers, too.

Experian.com has free scores you can check weekly.  Be careful here, because every time you log in you will have a chance to accidentally upgrade to their paid service.  

Websites that provide free credit scores include CreditKarma.com, NerdWallet.com, and CreditSesame.com. In general, these will provide Vantage scores that are updated weekly, as well as summaries of your credit report information, and other useful financial services. Theses site make money from advertising and referral fees when you sign up for a credit card they recommend, so be skeptical, and don’t sign up for any new cards until you have better score.
 
I have used CreditKarma, Capital One, and Experian, and found them useful.

Homework assignment #1:

Pick one or more of these sources, sign up, and discover what your credit score is today. Write it down, and set your improvement goals over the next few months to a year.  Be aggressive, because serious improvement is possible, even in the short term.

Once you find your score, what does it mean?  It depends on the scoring model you are using,

According to myFICO.com, here are FICO score brackets:

According to Experian, here are the Vantage score brackets:

FICO and Vantage brackets don’t align because they use different algorithms and weight your credit history differently. In general, however, you can chart your progress with whatever scoring model you like.


Homework assignment #2:

Go to annualcreditreport.com.  This is the official site to access the three reporting bureaus for your free (once every twelve months) credit reports. Download your three reports, print them out, and before you leave each site, make sure your printer captures the report number, or account number, because you need this number to access that report again, and some printers tend to cut off this information. Spend some time reading the reports, and look for inconsistencies and errors.  Save these reports, we will use them in the coming weeks.



Next week I will highlight some of the key factors that comprise your credit score, and start to explore strategies (and hacks) that can help you achieve your improvement goals.