Your credit score, usually a number between 300 and 850, summarizes how responsibly you’ve paid your bills and managed credit in the past. Lenders, landlords, employers, and insurers may look at your credit score when reviewing your applications, as having a high credit score (and better credit history) typically makes you a stronger applicant.
Since your credit score is so important, you may want to check it before you apply for a new credit card, loan, or apartment. This way, you can determine if you should work on increasing your score before submitting your application.
So, how can you check your credit score for free? Below, we’ll look at ways you can check your score without spending money and discuss simple tips for improving your score over time.
Ways to Check Your Credit Score For Free
Each year, you can request a free copy of your credit reports from each of the three credit bureaus (Equifax, Experian, and TransUnion) on AnnualCreditReport.com. Unfortunately, these free credit reports typically don’t include your actual credit scores.
However, you can learn your credit score for free from:
- Your lender, bank, or credit union – If you have a credit card, loan, or bank account, checking your credit score for free is easy. Most financial institutions give their customers access to their credit scores within their online accounts. Your credit score may also be featured in your monthly statements.
- Free credit scoring websites – Some websites allow you to check your credit score for free. CreditKarma and CreditSesame are two popular examples.
Why is a Credit Score Important?
Your credit score is important because it can have a notable impact on your financial opportunities. For instance, this three-digit number can affect your ability to:
- Qualify for affordable financing – Your credit score is one of the most important factors lenders consider when reviewing your applications. If your credit score is below 670, you may have a harder time getting approved for financing for everything from mortgage loans to private student loans.
- Receive low-interest rates – In addition to determining your eligibility for financing, your credit score is used by lenders to set your interest rate and loan terms. If you have a high credit score, you’ll be more likely to qualify for lower interest rates and better terms.
- Get approved for apartments – Just like lenders, landlords use your credit score to predict whether or not you’ll make your rent payments on time.
- Receive affordable car insurance premiums – Many states allow car insurance companies to consider your credit score when calculating your insurance premiums.
- Get hired for certain jobs – Lastly, some employers may look at your credit score during the hiring process.
As you can see, credit scores have far-reaching implications. A low credit score can limit your opportunities, while a good one can open doors and make your financing a lot more affordable.
Easiest Ways to Improve Your Credit Score
If your credit score isn’t as high as you want it to be, you may wonder what you can do to increase it.
Here are some easy ways to boost your credit score over time:
- Pay all of your bills on time – Payment history is the most significant factor in most major credit scoring models. If your credit score is low because of late payments, you can repair it by making all of your payments on time going forward. If you have a hard time remembering to pay your bills, consider using auto-pay options or creating recurring calendar reminders for them.
- Pay down your balances – If your credit card balances are high, you may have a high credit utilization ratio. This ratio compares how much credit you’re using to that amount of credit you have. For example, if you have a credit limit of $1,000 and a credit card balance of $500, your credit utilization is 50%. To earn a higher credit score, you should keep your credit utilization ratio below 30% at all times. You can achieve this by paying down your debt balances.
- Request a credit limit increase – A quick way to lower your credit utilization ratio is to ask your lender for a credit limit increase. If they agree to it, it can lower your credit utilization ratio right away. Using our previous example, a credit limit increase from $1,000 to $2,000 would bring down your credit utilization ratio from 50% to 25%. Just make sure you aren’t also increasing your usage.
- Become an authorized user – If you have a family member with excellent credit, becoming an authorized user on their account (with their permission, of course) is another way to give your credit score a boost. As an authorized user, all of your family member’s positive credit activity will be reported under your name. This is one of the best credit score improvement strategies for students since you can use it before you turn 18. Just make sure that you don’t do anything on your family member’s account that would harm their good credit.
- Open a student credit card – If you’re already a college student, you may not have established much, if any, credit history. In this case, you’ll need to open your first credit account. Getting approved for a regular credit card is tough without a credit score. Luckily, that’s not the case with student credit cards.
Once you receive your student credit card, be sure to make all of your payments on time and keep your credit utilization low so you can establish a high credit score right off the bat.
Other Ways to Improve Your Credit Score
Sometimes, a low credit score may be due to more serious reasons. Maybe you have outstanding late payments that have been sent to collections. Or maybe you missed a few utility payments and had your services shut off, resulting in a default payment on your credit report.
In the case of a default, collection, or charge-off, you may pay off the remainder of what you owe to lessen its negative impact. This won’t remove the default from your history, but it will be marked as complete and will ultimately look better than an outstanding one. Recovering from these types of situations may take longer, but it’s still possible if you adopt the right credit management habits going forward.
Perhaps you’re interested in building your credit score but don’t have a credit card. Some of the best ways to do this are to simply apply for relevant loans you can pay back to start building your credit, such as an auto loan, personal loan, or the aptly-named credit builder loan. As long as you’re making payments on time for these types of loans, you’ll be well on your way to building a good credit score without hinging on a credit card.
The Bottom Line
Now that you know how to check your credit score for free and increase it over time, you’re well on your way to establishing a good credit score and improving your chances of receiving loan financing, better interest rates, more affordable insurance premiums, and more.
Until then, if you’re interested in taking out a loan or credit card, you may have a better chance of getting approved if you apply with a credit union. Compared to traditional banks and other types of lenders, credit unions follow a not-for-profit structure, so they often have more lenient credit score requirements, lower rates on loans, and higher rates on savings.
Learn more and find a credit union near you today.