Photo Credit: Andres Rueda
A lot of financial “gurus” preach on a regular basis that you should check your credit score or your FICO score and know where you stand. Well, I’m telling you today that you SHOULDN’T!
You may be saying, “Wait!!! You need to know what your score is to get a credit card, buy a house, or even get a job!” And you know what – you’re wrong. What people are really looking at is your credit report, not your credit score.
Why Your Credit Report Really Matters
Your credit score is based 100% on your credit report – as a result, you should be focused on your credit report and not your credit score. Your credit score is a compilation of everything you do credit-wise: from opening and closing accounts, to what your balances are, to inquiries for future credit, and of course, if you’ve ever been late, missed, or defaulted on a debt.
Your credit score simply takes the data from your report and assigns an easy to read number to it – and each credit bureau (Transunion, Equifax, Experian) actually ranks everything different and assigns a different number. That is why your credit score is so arbitrary, it is really the meat and potatoes of your credit report that matter.
Check Your Credit Report, Not Credit Score
As a result, you should really be focused on checking your credit report, and not your credit score. You should check your credit report annually, and scour it for errors. If everything is correct on your credit report, your credit score will be accurate.
The bigger reason to check your credit report – it’s free once a year (where as, checking your credit score usually costs money).
If you want to check your credit report free, you can do so here, at the federal government website: AnnualCreditReport.com. You can pull your report from each bureau once a year. Some people suggest pulling one report every 4 months, so you can always have an updated report.
If you still insist on knowing your credit score, my favorite resource is Credit Karma. I like Credit Karma because they offer you one score truly free. You’ve probably seen their commercials, and there are no gimmicks.
Readers, what are your thoughts on not checking your credit score, and instead focusing on your credit report?
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him here and here.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.
Kirk says
Absolutely 110% have to check your credit score often. Don’t use the freecreditreport.com website as they charge you a fee – instead use the annualcreditreport.com site that Robert mentioned above. I was in the mortgage business so I know that even if you do the right things each month the credit companies can report your payments completely wrong.
Jackie says
Wouldn’t it be the companies you do business with that would report things wrong? And that info would be on your credit report?
Robert says
Yes, but what if someone had stolen your identity and it was reported on your credit report – you’d never know unless you checked.
Jackie says
I completely agree with you. It’s your credit report that’s important to check. (In fact, I’ve never checked my credit score — I’ve only known what it was after the times we’ve refinanced our house, because they mortgage company sent it to us.)
chaimaa says
checking your credit report is important to keep track and correct errors if they exist , and since its on the federal gouvernemet website why not take advantage of it
Jessica @Everything Finance says
I agree. It is more important to keep an eye on credit inquiries, payments reporting correctly and for anything fraudulent. Checking once a year is enough to know you are working in the right direction but even then, the only reason I can really think about knowing an exact number is when you are looking to purchase a home and want to do some increasing of the score to lock in a low APR.
Robert says
Even in that case – if your report is solid, your score should be solid as well!
CultOfMoney says
I think that it is very important to manage your credit because so many things today are linked to your credit score or credit report. I know that from my peer-to-peer lending, that the inquires, open lines of credit, any late payments are all listed in your credit report, and just numerically represented in a credit score. So yes, you’re right definitely check the reports and see what they have to say!
Shelly says
I think it’s important to know BOTH your credit score as well as what’s in your credit report. Obviously the score is a numerical representation of your credit profile, and is correct only to the extent that your profile is correct. BUT, many consumers make soft inquiries regarding new credit and loans based on a credit score. For example, a person might want to know whether they’re likely to get approval for a mortgage or credit card, and one of the first things a lender will tell you is what minimum credit score you need to have to be considered. Credit score = interpretation of your credit report. Knowing your credit score can help you better understand the interpretation process, as well as provide some preliminary basis for making credit-based decisions. And if you really don’t want to pay to get a FICO score, opt for a FAKO instead (like CreditKarma’s “educational” score which is totally free). Educational scores aren’t FICOs, but at least you’ll have some idea of how other people interpret what’s in your file.
Devin says
I’m not too concerned about my credit score since I don’t plan on getting any loans anytime soon, I prefer to save up for things I want. I do however use FAKO like creditkarma to at least get an idea of where my credit is at. Every couple on months I check my credit report to check that things are accurate and there isn’t any indentity fraud going on.
Hannah@Howmuchisit says
I check my credit report every year as a few people noted above. The only reason that I do is because I want to make sure that my identity hasn’t been stolen. I really don’t care about my credit score anymore as I have my home paid off as well as two paid off cars. I pay everything in cash so I don’t see any credit lines in my immediate future!
Kedra says
I always check my score bi-monthly, just to make sure no one has opened false accounts.
Marissa @ Thirtsyixmonths says
I try to check mine every 3 months. I found some funny things on there the last few times so I keep a close eye on it.
Ashley Morrissey says
I agree on checking your credit report versus checking the score. It’s a direct reflection on what your credit score would possibly be and why, if low or disappointing, that is reflecting poorly on your score.
-Ashley Morrissey
ashleymorrissey90(at)yahoo(dot)com
SB @ One Cent At A Time says
I check my credit score every month. I have a credit sesame account where they update Trans union score automatically.
yourPFpro says
I really recommend Credit Karma having used it now for about 2 years. I even did a side by side comparison with freecreditreport.com and opened up a new credit card. Credit karma was about a week later than freecreditreport.com in notifying me of the inquiry but hey its free! I just updated my blog with a post about maintaining your credit score. Check it out!
– PF pro