More places — from websites to banks — are offering free credit checks. Here's why you need to take advantage of that.
One-third of Americans don’t care about paying higher interest rates, having lower rent, or getting their identity stolen.
At least, those are the results of a recent survey by Bankrate, which found that 35 percent of American adults have never checked their credit reports. Another 14 percent wait a year between credit checks. The worst offenders? Millennials — and their grandparents. Respectively, 41 percent and 44 percent have never checked their credit reports.
But with more lenders, websites, and banks offering free credit reports or credit scores, monitoring your credit has never been easier, and more important. Here’s why…
Why checking your credit is so important
For getting a job:
One in 10 people have been denied a job explicitly because of a bad credit background, according to liberal think tank Demos. And the number of companies who check employees’ credit reports keeps going up; the Society for Human Resource Management estimates that 47 percent of employers now conduct credit checks on job candidates.
For being able to rent an apartment:
Yup, potential landlords will pull your credit report before they hand over the keys. That’s especially true if you’re trying to rent in a big city, or with a large property-management company, according to Credit.com. Things you should fix before applying for an apartment: any judgments, tax liens, or collections on stuff like utilities. Things that aren’t as big a deal: medical collections and late credit card payments.
For getting cheaper insurance:
A consumer may not think credit and car insurance are linked, but auto insurers disagree. In their eyes, having bad credit also makes you a riskier driver to insure. According to Bankrate, a consumer with bad credit will pay anywhere from 20 to 50 percent more for car insurance premiums, even if they have a spotless driving record.
For finding out if your identity has been stolen:
With the recent data breaches of Home Depot, Target, JP Morgan, and countless others affecting millions, many people are left wondering how to know if their identity has been stolen. The answer lies in your credit report. It won’t help you prevent identity theft, but it may show mysterious charges or debts that you know you didn’t have — signs you need to talk to your bank or lender.
Check your credit for free
Where to get free credit reports
Annualcreditreport.com is the most common place to go for a free credit report. It’s a website mandated by the federal government where each of the three credit reporting bureaus — Experian, TransUnion, and Equifax — provide you with one free copy per year. That means you can check a different one every four months.
Bankrate recently announced that they are providing free credit reports and free credit scores, with no purchase required. The reports are from Equifax, and the score is a VantageScore — not as good as the FICO scores discussed below. Fewer lenders pay attention to VantageScores. But both report and score are updated monthly, and free is free.
Discover users also get free monthly credit reports from TransUnion.
Where to get a free credit score
Not all credit scores are created equal — historically, free scores have been knockoffs or guesses. But times are changing and more lenders are offering a free peek at your FICO score, which is what most lenders look at to make decisions about your credit.
What’s the difference between a report and a score? Reports document the facts of your credit history — a credit score boils all that down to a three-digit number so lenders can quickly compare you to other consumers. While ranges vary by scoring model, most scores fall between 300 and 850 and higher is better. Here are the free scores we’re aware of…
- Citibank cardholders can see their FICO score each month for free, which is pulled from their Equifax credit report.
- Capital One has a tool called Credit Tracking that provides free access to your credit score and email alerts if your TransUnion credit report changes.
- Chase Bank recently made free FICO scores available to their Slate cardholders.
- Bank of America will provide FICO scores free to all of their cardholders for free sometime in 2015.
- Barclaycard offers free FICO scores for all of their cardholders, as well as guidance on how to interpret your score.
- Ally Financial has said that a free FICO score will be available to those who use their auto services beginning in summer of 2015.
- The United Services Automobile Association offers a free VantageScore, a competitor to FICO, to their credit card holders.
If you’re not happy with your score, check out our advice on improving it.