It's a good idea to review your credit information periodically. You might spot credit inquiries or applications that you didn't make - a sign that you could be a victim of identity theft. Or you might find errors in your personal data or payment history, errors that could cause lenders to deny you credit or charge you a higher interest rate.
By September 2005, all consumers will have access to a free copy of their credit report. The three major credit agencies have set up a centralized site to handle requests by phone, mail, and over the Internet. Access to this site started in Western states last year and is being rolled out across the country.
But when you apply for a free copy of your credit report, you'll often be offered the chance to receive your credit score, for a fee. It's important to know the difference between the two.
Your credit report shows personal data and a record of your credit applications and credit usage, including your payment history. In summary, it shows how often you've applied for credit, how much you owe, and whether you make payments on time. Each of the three major agencies will have its own report on you.
Your credit score is a single number, usually ranging from around 300 to over 800. The number is based on various factors in your credit history. Generally, the higher the number, the better your credit. You might receive a different score from each agency, depending on the model they use.
If you're checking for fraud or mistakes, you need to see your credit report. This provides the details of your credit history and enables you to spot mistakes.
On the other hand, knowing your credit score may not tell you much, other than whether it's high or low. The score can change from day to day, depending on how you use credit. Each agency might assign you a different score. And a lender considering you for credit may use a completely different model, producing yet another number.
So, before you pay to see your credit score, consider whether you'd find a free copy of your credit report more useful.
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