Anyone who decides now to refinance a loan might wish to check out their credit score. Knowing your current credit rating could prompt a decision to improve the rating, potentially opening doors to better refinancing rates.
However, the average person might not know how to learn their credit score. The good news exists for these people: the steps to review a credit score are relatively simple.
Understanding the Basics of a Credit Score
A credit score refers to the numerical ranking of someone’s creditworthiness. For example, those with a low score may be turned down for loans or approved with higher interest rates than someone with excellent score.
Different services provide credit scores, so one entity might rank someone higher than another. That said, don’t expect much difference between the various score rankings. Instead, they should all be making the same ballpark.
The Credit Score Figures
Everyone strives for excellent credit, reflected by a credit score between 720 and 850. 690 to 719 represents good credit, while 630 to 689 is fair. Anything listed at 629 and below is outright bad credit.
Several factors contribute to a credit figure, including the length of someone’s credit history, whether the person missed any payments or defaulted, and the current debt-to-income ratio.
No matter how bad a score is, someone could take steps to improve it. Again, the first action usually involves finding out the current score.
Website Inquiries
Some websites provide free access to the credit scores reported on the top three resources, Experian, Equifax, and TransUnion.
Some services may charge a fee, but paying for the information might not be necessary. Choosing a reputable website seems essential, and avoiding phishing scams is necessary. Keeping confidential and privileged information from an identity thief’s hands seems imperative.
Review Features on Credit Card and Banking Apps
Numerous credit card companies and banks offer an accommodating feature to their customers: a free look at their credit scores.
Installing an app on a smartphone, signing into the account, and selecting any “check credit score” options should reveal the current rating.
Such features allow customers to stay on top of their score, making adjustments if they feel improving the score is necessary.
For example, someone planning on refinancing student loans might find a better score leads to better interest rates.
As Lantern Credit by SoFi points out, “Many factors affect your credit scores and the interest rates you may receive.”
Sometimes, taking several steps to fix different things dragging down a credit score becomes necessary to improve financial well-being.
Performing a Credit Rating Review
Some might wonder how often they should check their credit score. Examining at least once a year seems advisable, although the easy and consistent access to credit card and banking apps allows someone to check whenever they want.
For example, reviewing the score multiple times per year could help someone make changes if the score declines.
Acting swiftly when the score drops might be better than allowing months to pass without taking action. So, why be in the dark about the score?
Accessing a credit score requires taking a few basic steps. First, upon learning your score, you can take steps to fix a low rating if necessary.