Debt.com » Get the Credit Score You’ve Always Wanted
Get the Credit Score You’ve Always Wanted
Debt.com teaches you everything you need to know to achieve the best credit score possible.
Your credit score might just be the most important number in your financial portfolio. Good credit is essential to get the right loans and credit cards at the lowest interest rates possible. And bad credit leads to higher costs and higher risk when you borrow. So, it’s in your best interest to maintain the highest credit score possible. But to do that, you really need to understand how credit scores work and what can increase or decrease your score.
This guide is designed to teach you everything you need to know to achieve and maintain the best score possible. Perfect credit is rare, but it is achievable with the right strategy. If you still have questions, visit our Ask the Expert section to get the information you need from Debt.com’s panel of experts.
Money in a minute, what is a good credit score? The problem with credit scores is that they don’t work like other rankings in our life. We know an A+ is good, we know what 100% means, but is 700 a good credit score? If it goes up to 750, how much better is that, really? Well, the first thing to know is credit scores don’t go from 1 to 100. They go from 300 to 850. A score under 579 is poor. A score above 679 is good, if you are above 800, that is excellent. The higher your score, the lower your interest rate on loans you can apply for. Why? Because a high score means you have a good track record of paying off your debts. Exactly one-third of Americans have a score that’s either poor or fair. But like studying for a test to raise your grades, there are ways to raise your credit score. Debt.com will give you the study guide for free, check us out.
Find all the tools and services you need to achieve good credit in Debt.com’s Credit Solutions Center.
At a basic level, credit scores are a way for lenders and creditors to measure the financial risk of borrowers. A credit score is a three-digit number that tells a lender how likely you are to repay a debt (or how likely you are to default). In other words, your score determines your creditworthiness. A low credit score means you are a high-risk borrower that’s had some challenges with debt in the past. A high credit score shows you are a responsible borrower that is likely to repay a debt on time.
So, credit scores make it easier for lenders to make financing decisions when you apply for a loan or credit card. Lenders often have a minimum score that you must meet or exceed to qualify for credit.
A brief history of credit scores in the U.S.
Prior to the invention of the first credit scoring model by Fair Issac & Company, lending decisions were highly personal. Consumers would go into a local bank and then had the arduous task of convincing a loan officer that they would repay the money on time. This meant that loan officers held all the control and loan approval basically came down to a case by case basis.
Then in 1956, statisticians William Fair and Earl Issac founded their company. They started exploring how past consumer behaviors correlated with the likelihood that a consumer would repay a new debt. From their research, they created the first credit scoring model – the FICO credit score.
FICO scores didn’t become widely used until 1989 when FICO began calculating scores based on credit reporting information from the three bureaus. However, the three bureaus weren’t exactly keen on FICO. So, they all created their own private scoring models in the hopes they could compete against FICO. But most lenders and creditors still relied on FICO instead of the other scoring models. In fact, FICO scores are still used in 90% of lending decisions.
In 2006, the three credit bureaus decided to stop competing against each other and focus on competing against FICO. They created the VantageScore together. They’ve updated the model several times, and the newest version – VantageScore 4.0 is a scoring model that uses the same range as FICO (300-850).
Today, VantageScore is widely used by many credit monitoring services when you want to track your credit score. However, FICO is still used in 90% of lending decisions.
Are you feeling stuck with a 600-something credit score? Here’s a way to get a boost without opening a new credit card.
It’s important to note in defining credit scores that scores and reports are not the same things. A credit report is a complete profile of your history as a credit user. Credit scores are calculated using the information contained in your credit report. So, while the two are interconnected, they are entirely separate tools.
This is also important because scoring changes depending on which report the scorer uses to calculate your credit score. In reality, every consumer can have more than one FICO score. There’s the FICO score based on your TransUnion report, the one based on your Experian report and one based on your Equifax report. If those reports all say the same thing, then your FICO score would be the same in all three cases. But if the reports differ, you might have different FICO scores, as well.
It’s worth mentioning that VantageScore doesn’t have this same challenge. Since the credit bureaus coordinated to make VantageScore, it pulls information from a tri-merge report. In other words, it uses the information from all three reports to calculate one single score.
Other scoring models
FICO and VantageScore are not the only scores that exist today. The credit bureaus still have their private scoring models.
Equifax has two scoring models they’ve used called Beacon and Pinnacle
Experian’s is the Experian Risk Score
TransUnion has a score called Empirica
These scoring models are still used on a limited basis by the bureaus themselves and by a few lenders. Some lenders may also use their own customized scoring models that are based on the needs of their customers and what type of lending they do.
There is also a score that affects your premiums and deductibles on insurance. It’s called a credit-based insurance score. Basically, insurers give drivers a score based on a variety of different factors that determines how much you pay. Credit report and scoring information are included in this credit-based insurance score. That means a bad credit score not only affects rates you pay on loans and credit cards. It can also lead to higher insurance costs, too. Back to top
How is a credit score calculated?
Embed This Image On Your Site (copy code below:)
How credit history affects your score
Credit history is the single biggest factor that impacts your credit. Creditors and lenders generally report payments to the credit bureaus every 30 days. So, a payment missed by a few days shouldn’t affect your score, but one missed by 30 days or more will. Creditors report payments missed by 30, 60, 90, 120, 150 and 180 days past due. Then the account would be closed and charged off.
According to Equifax, just one missed payment missed by 30 days can drop your score by 90 to 110 points. This makes keeping up with payments the most crucial thing you can do to boost your score.
Understanding credit utilization
It makes creditors nervous when you start hitting the limits on all your accounts. It’s a sign that you’re having trouble managing your debt. So, creditors look at credit utilization ratio to see if you’re managing debt effectively. Anything above 30% is bad for your score and lower is always better.
You also take a big hit here if you go over your credit limit on just one account. If the creditor reports the overage to the credit bureau, it can hurt your score by as much as 25 to 45 points. But on the flipside, decreasing your balances can quickly raise your score.
It’s also worth noting that increasing your total available credit limit can also improve your score. If you increase the amount of available credit you have, then your ratio will decrease because you’re using a smaller percentage of the total. Still, it’s not recommended to take on new credit just for the sake of fixing your ratio.
The tricky business of maintaining your credit age
The theory behind why creditors want to know your credit age is because someone with more experience using credit is less likely to have problems managing debt. So, creditors look at how many accounts that you’ve maintained in good standing, and how long you’ve had those accounts.
This makes maintaining your oldest credit lines a crucial part of keeping a high credit score. You never want to let your oldest accounts close, especially if you’ve kept up with the payments. Be aware that a credit card company may close your account if you don’t use it. So, find a good use for keeping these accounts open, so you don’t accidentally decrease your credit age.
Understanding which inquiries affect your score
There are two types of credit inquiries – called hard and soft pulls. Hard pulls happen when you apply for a new loan or credit card. Everything else – employer credit checks, checks for pre-approved offers and your own checks – are soft pulls. Soft pulls have no impact on your credit score.
By contrast, hard credit inquiries can negatively affect your score if you have too many applications within a six-month period. Hard pulls stay on your credit report for 2 years, but they only affect your score for six months. So, you want to space out new credit applications to avoid decreasing your score.
The reason why new applications matter is because creditors want to make sure you can manage the debt you have. If you take on too much new debt at once, that can be tough to manage. So, a lender is less likely to extend you a loan if you’ve opened three credit cards in the past few months.
Types of credit and diversity of debt
This is the smallest and one of the most mysterious factors because there are no concrete rules for what’s good and what’s bad for your score. Basically, creditors want to see that you have experience managing different types of debt. A diverse portfolio means that you’re well-versed in paying off different types of loans, as well as credit cards. If you’ve only had loans or only had credit cards, this can be a red flag to lenders.
So, you want to ensure you have a diverse portfolio of debt. Also, be aware that there are good debts and bad. Good debts are any debt that increases your net worth or lifetime earning potential. That includes mortgages and student loans. Bad debts are everything else because they decrease your net worth without giving you anything in return. (Net worth is total assets minus liabilities, which are your debts.)
So, you always want your credit report to show a healthy mix of different types of debts. You want good debts and bad debts, all maintained in good standing.
Which of the following most influences your credit score?
a) A loan payment missed by more than 30 days
b) The number of accounts you have, in total
c) Your current total debt as compared to your income
Credit history is the single biggest factor that influences your score. So, missed payments that negatively affect your credit history hit your score the hardest. Although collections affect your credit history, the credit bureaus have deemphasized medical debt collections versus other types of collection accounts..
What is a good credit score? Understanding credit score ranges.
Both FICO and VantageScore both range from 300 to 850. Most people have credit scores between 500 and 800. Although it’s possible to have a perfect credit score, it’s fairly uncommon that someone achieves the absolute highest score of 850. It’s also uncommon to have the worst credit score at 300.
Although FICO and VantageScore use the same numeric range, they break the spectrum up differently. FICO categorizes debt from bad to excellent, while VantageScore goes from deep subprime to super prime. Those ranges don’t exactly match numerically either. So, for instance, if your credit score is 670, that’s prime on VantageScore, but only fair on FICO.
Here are the ranges for FICO scores:
Credit Score Designation
Excellent or exceptional
Good (this is the median credit score range)
Below average or fair
Poor or bad
Here are the ranges for VantageScore 3.0:
VantageScore 3.0 Range
Credit Score Designation
What is a good credit score?
According to the FICO range, good credit scores start at 700. But as you can see from the map below, most consumers have scores in the 600s. In fact, it wasn’t until last year that the average national FICO score topped 700 for the first time in scoring history. And while the credit score range chart above says 700 is at the bottom of good, FICO’s own analysts describe it differently.
“A score of 700 is considered very good credit,” explained Ethan Dornhelm, FICO Vice President for scores and analytics. “Consumers will likely qualify for the credit they want at favorable terms.”
So, if you’re aiming for a target, 700 may be a good first goal. Most lenders will at least approve you with a FICO score of 700. You should also qualify for at least average interest rates at 700. However, keep in mind that smaller lenders and financial institutions like credit unions may have higher minimum requirements. So, if you’re comparing lenders to find the best deal, you may encounter lenders that have a minimum requirement of 720 on at least some types of loans.
What is a bad credit score?
In most cases, any score that’s less than 600 means you may struggle to get approved for traditional financing. But that doesn’t mean that all doors will be closed to you when it comes to qualifying for loans. You just have to find a lender that’s willing to work with consumers will lower credit scores.
Depending on the type of credit you need, there are also programs and options specifically designed for people with bad credit. For example, you generally need a FICO score of 620 or higher to qualify for a traditional fixed-rate mortgage. But you can qualify for adjustable-rate mortgages as long as your score is above 600. But even if that doesn’t work, there’s still hope. FHA loans backed by the Fair Housing Authority are designed for people that face financial challenges, such as low credit. First-time homebuyers have gotten approval with scores as low as 560.
When it comes to credit cards, you can get around a bad credit score entirely by getting a secured credit card. This is a card that you open by making a cash deposit to the creditor. They give you a credit line equal to that deposit amount. If you don’t pay the money back, they use the deposit to cover your charges. This means the creditor minimizes their risk, so there is no credit score requirement to open a secured credit card account.
Prime vs subprime
The term “subprime” became a buzzword around the mortgage crisis of 2008 that contributed to causing the Great Recession in 2009. The use of prime is this case doesn’t specifically refer to VantageScore in this case. Instead, it just generally refers to anyone with less than fair credit.
Mortgage lenders relaxed their lending standards heavily in the early 2000s. They basically started approving mortgages even for borrowers with bad credit. While these borrowers couldn’t qualify for traditional fixed-rate mortgages, these relaxed standards meant that borrowers could qualify for adjustable-rate mortgages.
When the housing bubble popped and home values fell, mortgages went upside down. Borrowers owed more on their loans than the homes were worth. High-risk subprime borrowers with bad credit were hit the hardest and were generally the first to default. Lenders tightened their standards back up, which is why 600 is generally the cutoff unless you have a loan back by FHA.
However, this serves as a cautionary tale for borrowers. Just because you can get approved for a loan based on your credit score, it doesn’t mean that you should get that loan. Debt.com’s founder warns that the same relaxed lending practices that led to the mortgage crisis have moved on to the auto loan industry. So, while it’s important to find a lender that’s willing to work with you if you have a low credit score, always consider your budget and your ability to repay a debt before you sign the loan agreement. Back to top
How to check your credit score
There are several ways to check your credit score. First, it’s important to understand that unlike free annual credit reports, there’s no federal law that guarantees consumers the right to check their credit score for free. And when you use the free annual credit report check protected by the Fair Credit Reporting Act, it will never include your credit score.
How to check it for free
Still, although free credit score checks are not a federally protected right, there are still several ways that you can check your credit for free.
There are free credit monitoring services like Credit Karma and Credit Sesame. They never charge consumers for checking their score. Instead, they make money by showing you credit card offers that you can qualify to receive based on your score.
Many paid credit monitoring services offer a free score along with a month of free monitoring. However, they often require you to enter your credit card information when you sign up. If you don’t cancel before the end of the month, they charge you automatically.
Some credit card companies offer free credit score tracking if you have a card with them. For example, Capital One offers the CreditWise that tracks your VantageScore, while Discover Card offers free FICO score tracking to customers.
Some bank accounts also come with free credit monitoring. Check with your financial institution to see if they have free monitoring services. Most major banks offer credit monitoring, but it may only be free for some accounts (usually the premium accounts that require big money).
Paid credit monitoring services
You can also pay to check your credit score. Paid services can be useful because they tend to come with extra features and tools that free services don’t offer. This includes added fraud protection against identity theft, such as ID theft insurance, as well as tools like scoring simulators that estimate what would happen to your score if you took certain actions.
FICO and all three credit bureaus offer paid credit score monitoring services. However, FICO will only give you your score, so you don’t get to review your credit reports anytime you want. The credit bureaus will only show you their information and a certain credit score. These are the scores that the bureaus currently offer:
Finding the best way to track credit score changes
As you can see, there’s no shortage of ways to track changes in your credit score. Paid services are often the best option if you can afford it because things like ID theft insurance can be extremely beneficial if you ever need them. However, if you don’t have the funds to get a paid service, it’s definitely worth your time to find a free one. First check with your bank or credit union, as well as any credit card accounts you have to see if you can access a free service. If not, go for a really free service like Credit Karma or Credit Sesame. Avoid services that offer a month free and then charge you. Back to top
Increasing your credit score
Knowing how credit scores are calculated means it’s fairly easy to figure out how to raise your score. But raising your score does take time. In most cases, you can instantly improve your score. The only way to get fast results is through credit repair, which can improve your score in as little as 30 days. But that only works if there are mistakes in your credit to correct. If you legitimately incurred a lot of negative items on your credit report, then it’s going to take some work to improve it.
What credit score do you start with?
There is no starting credit score for consumers who are new to using credit. If you’ve never had any debt to repay, then you have no credit score. That’s because there’s no credit history to base your score on, so there’s basically nothing to calculate. It’s worth noting that no credit score can be just as problematic as a bad credit score. If a lender doesn’t have any number to use to assess your risk, they may not be willing to work with you. What’s more, if the lender has a minimum score requirement for approval, no credit score means you can’t meet that limit any better than someone with a 350 FICO.
Your credit history begins when you take on debt that needs to be repaid. Creditors report your payment history and balance to the bureaus every 30 days. So, your starting score will be based on how responsible you are with repaying that first debt.
That being said, the less weighty scoring factors matter more when you have a limited credit history. If you only have one account, then you don’t have a diverse mix of debt. You also have a very young credit age. But don’t go crazy applying for credit to build your payment history faster. If you make too many applications within a 6-month period, that will decrease your score, too.
If you spread out getting small loans and secured credit cards and ensuring you make all your payments on time, it generally takes about 12-24 months to get a score that will allow you to start qualifying for traditional unsecured credit cards and bigger loans, like auto and home.
How to raise your credit score from bad to good
If your score is low because of some past troubles with debt, don’t panic! There are steps you can take to raise your credit score. The good news is that the United States credit system is very forgiving. By law, negative items like missed payments or even bankruptcy can’t stay on your credit report forever. They fall off after a set amount of time – usually 7 years.
But even before that, the “weight” of how much past mistakes affect your score decreases over time. A payment missed last month is far worse for your score than one missed five years ago. That means that taking positive actions now can offset any past mistakes quickly.
Debt.com offers a step-by-step guide on how to improve your credit score. But here’s a quick snapshot of what it will teach you:
Review your credit reports to see what negative information may be hurting your score.
If any of those negative items are mistakes, go through credit repair to fix them.
Once that’s done, take steps to build credit:
Make all your payments on time to build a positive payment history
Keep your credit card balances low to maintain a good credit utilization ratio
Don’t let bills like medical debt or utilities go into collections
Don’t close old accounts that you’ve maintained in good standing
Apply for credit sparingly to avoid too many applications at once
Make sure negative items drop off your credit report when they’re supposed to
If you follow the steps we recommend, you should see positive movement in your score within 6 months to a year. Then, it should take about 24-36 months to achieve a good score, but it depends on how many negative items there are to offset. Back to top
Why did my credit score drop?
Any decrease in your credit score will be disheartening, but it isn’t always immediately clear why your score dropped. The most likely culprits for a decrease are:
A payment missed by more than 30 days
A collections account, particularly for non-medical debt
Running up high balances on all your credit cards
Going over your limit on even one of your credit cards
But if you haven’t made any of these obvious mistakes, a drop in your credit score can seem to come out of nowhere. Our expert Steve Rhode, the Get Out of Debt Guy understands.
“It can seem that there are people in secret rooms armed with dartboards, roulette wheels or Magic 8-balls attempting to assess your credit score daily. Sometimes it goes down and you have no idea why,” Steve says. “But there is always a pattern, even if you can’t immediately see it. Your credit score goes down because there is an event that took place that – from a creditor’s perspective – makes you seem like a higher credit risk. You just have to find that hidden reason.”
Aside from the common reasons for a score to drop that we list above, here are some less common reasons that credit scores drop.
#1: An old account closed and decreased your credit age
Closing an old account doesn’t seem like it should make you a higher risk borrower. But if you close your oldest account that you maintained in good standing, you decrease your credit age. Thus, you look like a less experienced borrower.
And realize that you don’t even need to actively decide to close your account for this to happen. If you don’t use a credit card, the creditor may close the account for you due to inactivity. So, check to make sure all your accounts are still open. In addition, find good small uses for old accounts, so you keep them open.
#2: You have a new credit report error that you need to correct
Credit bureaus and the lenders and creditors that report to them make mistakes. A creditor may have reported that you missed a payment that you actually made on time. Or they might have reported you went over your credit limit when you aren’t anywhere close to it.
So, if your score drops, review your report to make sure you don’t have any new negative items that shouldn’t be there. If you do, start the credit repair process immediately. Once you correct the error, your score will bounce right back.
#3: You’re the victim of identity theft
If you didn’t do anything wrong that negatively affected your score, maybe someone else did. If someone got your credit card number, they may have run up a balance in your name. Your Social Security number could also be compromised. You may have new accounts – or new accounts that have been run up and already gone to collections.
Again, review your credit reports to make sure you recognize all the accounts and that there’s nothing new you didn’t expect to see. If there is, it may be time for a credit freeze. Good news, as of September 2018, freezes are free!
#4: A cosigner or joint account holder did you dirty
Cosigning is often risky business. You want to help someone out because they have weak credit, so you agree to cosign. But if they don’t pay the debt back, you’re on the hook and nonpayment will affect your score. If the bills aren’t coming to you or you aren’t checking the paperless transactions, then the first sign of trouble might end up being a missed payment on your credit report. This would negatively affect your score.
This can also happen to joint account holders who separate. Even if a divorce decree decided that one partner was responsible for a debt, if the other partner doesn’t remove themselves as a joint account holder, they could experience credit damage if the responsible party doesn’t pay. This is why you should always address joint accounts removals promptly after a separation.
#5: You paid off a loan
This one sounds a little counterintuitive. Paying off a loan sounds like it should be good for your credit score. But some consumers have experienced a slight decrease in their score following the completion of a loan repayment.
“I can understand why people would be confused and even a little irritated when this happens,” Rhode commiserates, “Why would a responsible act like paying off a loan drop your score? The reason has to do with limiting the diversity of your credit.”
Basically, the smallest credit score factor evaluates what types of debt you hold and the diversity of your debt. There are good debts and bad debts. Good debts are anything that increases your net worth or lifetime earning potential. When you pay off debts, like mortgages and student loans, you lose a good debt and decrease the diversity of your debt. Rhode recommends not to panic if this happens.
“Certainly you do not want to take out another loan to improve your score,” Rhode advises. “So relax. In this case, solid management of your remaining accounts will bring your score back up naturally.”
Looking to track daily changes in your credit score? Try Debt.com’s 3-bureau credit monitoring tool free for 30 days.
The credit score you need to buy a house depends on what type of mortgage you wish to use. If you want to get a traditional fixed-rate mortgage, then you generally need to have a FICO score of at least 620. The score requirement for an adjustable-rate mortgage is lower; you generally need a 600 FICO score or higher.
If you are a first-time homebuyer and you plan on using an FHA loan, then score requirements are even more flexible. Some FHA lenders will work with you even if your score is as low as 560. That’s because the loan is backed by the Federal Housing Authority, so there is less risk for the lender. If you default, the FHA covers the loan.
It’s worth noting, however, that you should always aim to have the highest score possible before applying for a big loan like a mortgage. Even just 0.25% difference in your mortgage interest rate can come out to tens of thousands of dollars extra in the total cost of your loan. It’s often worth a little time to build your credit before you apply for a mortgage. That also gives you time to save up for a larger down payment.
What credit is needed to buy a car?
As we mentioned earlier, subprime lending in the auto loan industry is more prevalent than you might think. So prevalent, in fact, that experts – including Debt.com’s own Howard Dvorkin – have been debating for several years if the auto industry will be ground zero of the next financial crash.
But for now, the good news is that auto loans are accessible, even for borrowers with bad credit. So, as long as you make sure you can afford the loan and won’t be risking default, you can get financed even if your score is below 500. In fact, 4% of auto loans last year went.
Just be aware that interest rates climb as your score drops. A borrower with bad credit can expect to pay five times as much for a new car. And don’t think that you can just buy used to get a better deal. Interest rates on used cars are higher than new.
Experian published a list of average auto loan interest rates by credit score for new and used cars.
Average APR, new car
Average APR, used car
Near prime: 601-660
Deep subprime: 300-500
There are also those credit-based insurance scores. In most states, you pay more for car insurance if you have bad credit. So, the cost of buying, owning and even leasing a car is more expensive if you have bad credit.
Don't Believe Everything You've Been Told about Credit Scores!
Credit scores are important and widely used. But there are some pretty common misconceptions that run rampant amongst consumers. These are the top three myths about credit scores debunked by our experts
1 of 3
Credit scores combine when you get married
Both spouses keep their credit profiles and credit scores after they get married. That’s not to say your credit habits don’t affect each other. Joint debt will affect both spouses jointly. In fact, even after divorce joint debt still affects both exes jointly.
But back to marriage. Keeping separate credit profiles and credit scores can be a good thing. If you want to qualify for a better interest rate on a certain loan at the start of your marriage, put it in one spouse’s name. Then you can use smaller joint debts to build the other partner’s credit score. That way, you can eventually do things like buy your first home together.
2 of 3
Employers check your credit score when you apply for a job
Credit scores are never included in the credit check that employers run. They only check your credit report. The idea is that credit checks give employers a better idea of how responsible you are. Positions where you may handle money are said to consider credit reports even more closely to see how you handle your own money.
Even if you won’t touch any company cash, if you run up lots of debt, have all kinds of debts in collections and have a public record for unpaid child support, it doesn’t look good. But the good news is that you won’t get turned down for a job because your score isn’t 620 or higher.
3 of 3
Carrying credit card balances is good for your credit score
This is a really dangerous myth, because some people actually think carrying balances helps their credit. They believe that if they pay off their credit card balances in-full every month their score will drop. As a result, they throw money away on interest charges by carry debt over every billing cycle.
Let’s be clear. Credit utilization is always better the lower it is. Anything over 30% is bad for your credit, but the best is to be at 10% or less. If you maintain a net 0% utilization ratio because you always pay off charges in-full, you won’t hurt your score. You’ll actually boost it.
Of course. As long as you have some credit history, then you have a credit report. If you have a report, then you have something to calculate a score from. Some people stay away from credit cards all their lives and they still achieve a good score. It just involves using loans and repaying them responsibly.
It is worth noting that credit is usually easier to build with responsible credit card use. Credit cards diversify your debt and show that you can manage revolving debt. That makes you more experienced with credit and thus makes you more creditworthy.
Does checking your credit score lower it?
No. Checking your credit score will never lower your credit. Only inquiries known as “hard pulls” can affect your credit score. A hard pull happens when you authorize a check related to a credit application. In other words, when you apply for a new loan or credit card. If you have too many new credit applications within a 6-month period, it can decrease your score.
All other inquiries are considered “soft pulls” and don’t negatively affect your credit score. This includes not only you checking your credit yourself, but also things like employment credit checks.
You can check your credit score daily and even check your credit reports daily through a monitoring service and it will never negatively affect your score.
Credit score updates for 2019, including details on UltraFICO
There have been some welcome changes to credit reporting recently that have positively impacted many consumers’ scores.
Medical collections are beginning to matter less
In 2018, our expert Gerri Detweiler reported on Credit.com about how medical collections can affect your credit score. In newest scoring models (FICO 9 and VantageScore 4.0) medical collections don’t carry as much weight as other types of collections. But they still carry weight. What’s more, many lenders still use older scoring models, where medical collections still count as much as other collections
But this is huge for individuals and families that have seen their scores ruined by high medical costs. One collection account could negatively affect your score by 50 to 100 points. So, if the only thing wrong with your credit score is medical collections, then chances are high you can get financed. You just need to find a lender that uses checks the most recent FICO or VantageScore.
Tax liens no longer affect your credit score at all
On April 16 of 2018, the credit bureaus announced that tax liens would no longer be listed on consumer credit reports. If it’s not listed on your report, it can’t affect your credit score. This is good news because a lien could affect your score by as much as 30 points.
FICO announces the UltraFICO™ Score
In October, Experian and FICO, along with Finicity announced a new scoring modelcalled the UltraFICO™ Score.  This new model is intended to help consumers with low traditional credit scores qualify using a new model that takes financial management activity into account.
Basically, if you can’t qualify using a traditional FICO, you can ask your lender to use UltraFICO. This will look at account data on any checking and savings accounts you wish to include. So, your banking history can be used to bolster your credit history, giving you a higher score.
The pilot program is not set to launch until 2019. A handful of lenders and financial institutions will test run UltraFICO before it’s rolled out everywhere. Debt.com’s Founder Howard Dvorkin weighed in on why he thinks this new UltraFICO score will be good for consumers. He also warns against a key risk that’s inherent to getting financing when you already have a low credit score.
How do you know which credit score your lenders will use?
As we mentioned earlier, FICO touts the fact that FICO credit scores are used in 90% of lending decisions. But that doesn’t mean that 9 out of 10 lenders are all checking the same score. There are different scoring models within FICO. In fact, according to a 2017 article in Forbes, there have been 60 individual FICO scoring models rolled out since 2011. 
This means that just because a new scoring model would benefit you, it doesn’t mean that’s the scoring model that your lender will check. Most lenders are currently using FICO 8 or VantageScore 3.0, even though there is a FICO 9 and VantageScore 4.0. So, for example, most borrowers aren’t yet reaping the benefits of medical collections being removed from new scoring models.
The easiest way to know which score your lender will check is to ask before you apply for the loan. You want to ask before you authorize a credit check, since each hard pull credit check creates a hard inquiry on your credit report. Too many of these inquiries can drag down your score. So, asking ahead of time avoids unnecessary pulls.
If you know your score is low, you can even ask your lender if there’s a way that they will take bank accounting information into account. Even before the UltraFICO rollout next year, some lenders are already considering banking history to help subprime consumers. Once FICO rolls out this new model, you’ll hopefully see more lenders take this up next year.
Until then, however, you still need to take steps to improve your credit score. That way, you can qualify under traditional scoring models, even the older ones. It’s the best way to ensure you get the loans and credit cards you want, regardless of which scoring model the lender checks.
Try 3-bureau credit monitoring with VantageScore 3.0 credit score tracking free for 30 days with Debt.com’s Identity Theft Protection Tool. Monitor your score and protect against ID theft all with one handy tool!
We’ve received your request and have matched you with a Trusted Provider that specializes in .
You should receive a call within the next few minutes so you can get connected. If you are unavailable, a confirmation text will be sent, so connecting at your convenience is quick and easy. We look forward to assisting you!
All About Credit Cards
From the pros and cons of using credit over cash to the right way to balance rewards against added interest, we show you the ropes so you can master your credit cards.