About Credit Scores & Free Credit Report

By: Mary Kirby, 2/26/2019

Whether you are looking to apply for a credit card or a home loan, your credit score is taken into consideration by lenders. Your “credit score” attempts to predict your ability to repay the loan, which is why it is also considered a “risk score.”

Having a good credit score increases your chance of acquiring a loan. The higher your credit score, the greater your chance of obtaining a larger loan and with better terms.

There are many types of credit scores:

  • FICO® Scores created by the Fair Isaac Corporation
  • VantageScore was developed by Experian, Equifax, and TransUnion
  • Industry-specific scores

Mortgage lenders use very specific scoring versions. These include:

  • The FICO® Score 2 based on Experian data
  • The FICO® Score 5 based on Equifax data
  • The FICO® Score 4 based on TransUnion data

The two most common types of scoring versions are the standard model of the FICO® Score, and the VantageScore.

Ratings for Credit Scores

Rating FICO® Scores VantageScore
Very Poor 300-579 300-549
Poor n/a 550-649
Fair 580-669 650-699
Good 670-739 700-749
Very Good 740-799 n/a
Excellent 800-850 750-850

What Factors Affect Your Credit Scores?

  • Payment history on loans and credit cards (most influential)
  • Total debts and amount owed
  • Late payments on loans and credit cards
  • Collections of debts, frozen accounts, bankruptcy
  • The number of credit accounts you have
  • The number of inquiries for your credit report

Minimum Score

In offering credit or approving loans, most lenders do not have a minimum credit score requirement. However, the lower your credit score, the less likely you are to be approved for a loan. If this is your situation, you would need to improve your credit score first to qualify for better rates and terms.

However, some mortgage services, such as FHA, have guidelines for those with low credit scores.

  • To qualify for an FHA mortgage loan, you need to have a credit score of 580 or higher and a down payment of 3.5%.
  • For those with a credit score less than 580, you would need to have a 10% down payment.

Free Annual Credit Report

The Fair Trade Reporting Act (FCRA) entitles everyone to one free credit report every 12 months. At your request, credit reporting companies–Equifax, Experian, and TransUnion–must each provide you a free copy of your credit report.

These three nationwide credit reporting companies provide free annual credit reports only through annualcreditreport.com; therefore, you should not contact these companies individually. If you do, they may charge you for your credit report.

Beware of Imposters

Only one website is authorized by the Federal Trade Commission to deliver a free credit report: AnnualCreditReport.com. Beware of imposters trying to obtain your personal information.

To order online, visit website: https://www.annualcreditreport.com
To order by Phone: (877) 322-8228

To order by mail, do two things: