Monitor your credit scores more effectively by tracking the scores used by 90 percent of lenders.
There are more ways to keep track of your credit score today than ever before. In the past, consumers were kept in the dark about their credit scores – it was all a big secret. Today, consumers are able to track credit scores, sometimes for free, from several different sources. But there’s still a problem.
Which credit scores are used by banks and lenders?
What credit score should you be tracking?
The credit score you get for free isn't always the same score a lender looks at when deciding whether to grant you a mortgage, credit card or auto loan. There are so many credit scoring models out there, it's easy to lose track.
Here are a few sites that allow you to track your credit score free of charge:
CreditKarma.com – is one of the more popular online sites that offers access to credit scores. It allows you free access to both your credit reports and credit scores based on TransUnion and Equifax VantageScore 3.0 model although VantageScore introduced model 4.0 in 2017. Both models range credit scores from 300 to 850.
Only a hand full of lenders use VantageScores. According to CreditKarma VantageScores are currently being used by only 2200 lenders. VantageScores are calculated with the following factors taken into account:
Payment history: extremely influential
Age and type of credit: highly influential
Percentage of credit limit used: highly influential
Total balances and debt: moderately influential
Recent credit behavior and inquiries: less influential
Available credit: less influential
CreditSesame.com – allows a free look at your Transunion Vantage 3.0 score only. For a complete credit report you will have to sign-up for a fee.
Credit.com - you can get two free credit scores, one from Experian and your VantageScore 3.0 updated every 14 days. You have the option of purchasing your FICO score and all three credit reports from Experian, Trans Union, and Equifax (but you are entitled to a free report once a year through annualcreditreport.com).
Wallethub.com - you’ll get a free TransUnion VantageScore and credit report.
With these free services, you’ll get a broad view of what your credit score looks like with each of the major credit bureaus. But it won't be your true FICO credit score.
Track the score most widely used by lenders.
While there are many credit scores available to track, the FICO scores from myFICO.com are the ones you should be most concerned in tracking.  It’s the credit scores that 90 percent of banks and lenders use and it's a good indicator of your financial health.
At myFICO.com scores from Experian, Transunion and Equifax are available for a fee. If you are planning on making a big purchase like a home or car, it’s a good idea to track FICO scores to know where you stand.
Your FICO will go up and down trends. It's a good idea to check this behavior to find out what causes it. Understand what makes up your FICO score and practice good credit habits to build an excellent score.
Here are the factors used in calculating your FICO scores:
Payment history (35%): Do you make your payments on time? Do you have any negative public records, such as bankruptcies, foreclosures, liens, lawsuits, etc.? When you make a late payment, your credit score could take a hit of up to 100 points.
Credit utilization (30%): How much do you owe on all of your accounts? In general, the more debt you carry in relation to your credit limit, the lower your score will be. To build excellent credit use ten percent or less of your available credit limit.
Length of credit history (15%): How long ago did you open your first credit account? What about your newest credit account? What is the average length of all of your credit accounts?
Types of credit in use (10%): What types of credit accounts do you have? Do you have more than one type of credit accounts such as credit cards (revolving credit) and personal, mortgage or auto loans (installment loans).
New credit (10%): Have you applied for new credit recently? Did you apply for multiple new credit accounts in a short period of time? If so, that will hurt your credit scores. One additional inquiry may have little or no effect on your credit score, but applying for a lot of new credit will affect the average length of your credit accounts.
By purchasing your true FICO scores you’ll get a more accurate view of what lenders see. Most lenders use FICO 8 version of credit scores even though FICO 9 is available. They can be a little slow at updating company-wide systems due to costs.
By viewing your FICO scores you can better prepare for applying for credit.