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.