Raise your hand if you’ve seen those fun “free credit report” or “free credit score” commercials. Yeah. I thought so.
In today’s credit-reliance world, credit report and score is BIG business. The industry makes millions of dollars as they track both consumer and business credit habits, so that lenders both small and big can have a reliable barometer to offer credit to people and businesses.
To be clear, there’s nothing wrong with providing consumers with access to their credit score and reports for a fee. After all, when utilized properly, consumers can better make informed choices and financial decisions when they apply for life changing loans. When you’re shopping for a car and you’re sitting across the dealer’s finance officer, you don’t want to be in the dark on what type of interest and loan you may qualify for. Knowing your score, credit history, and overall creditworthiness can be a worthwhile price to pay for.
Having said that, the industry certainly would love to convince you that you need to check your score religiously, to prevent everything from not being able to own a home to identity theft. Here’s three solid reasons why you don’t need to check your score regularly:
1. There are only a few instances where your credit score can vastly affect your financial well-being
The fact of the matter is, knowing your credit score won’t exactly help you in all financial situations unless it has something to do with credit (when you’re applying for home loan; auto loan; student loan; job (sometimes); and certain personal loans.). The industry live skor and various commercials will like to make it seem like your life would be ruined if you’re oblivious to your score, but that’s far from the case.
2. Your credit score and credit report are two different things. One’s not free (sort of), and one can be had for free.
Credit score and credit report are two different products. One is a numeric based score that shows your overall creditworthiness based on a scale (depending on the scoring formula of the company), while the other, credit report, is a history of your past and current credit accounts. Since mandated by federal law, all consumers in the United States have access to free annual credit report.
If you’re simply curious about what may be in your credit history, of if you want to make sure there are no accounts opened without your knowledge (e.g., identity theft or erroneous report), you can simply request for your free credit report. There’s absolutely no need to buy a credit score if all you need to do is stay on top of your credit history.