Anyone who is trying to improve their credit understands the importance of their credit score. This three digit number is not only an indicator of how well you are managing your finances, but it can also affect the terms and rates you receive on financial products, which means it can affect the long-term affordability of big purchases. And, if you’re beginning to struggle with making ends meet and paying your credit cards on time, you’re going to want to protect this score and keep it as high as possible. Any sharp drop might be an indication that your finances are slipping out of control. Credit counseling from a nonprofit agency has always been an effective way to analyze your credit and budget with a professional, and a review of your credit report has been a vital part of this process. But the credit score, the number many clients are searching for, hasn’t been available. Now that’s changing. As of April 21, 2015, credit counselors, including those at Clearpoint, can provide clients with their FICO credit scores as part of the counseling process—all for free.
The Difference between Reports and Scores
Remember, there is a significant difference between your credit report and your score. Your report simply shows an array of information that is used to determine your credit worthiness and thus your score. These items include things like who you owe (the open accounts that you have, along with their limits and details), accounts that you’ve closed, payment history (Have you been consistently on time?), your history of inquiries (Have you been asking for more credit lately?), and any negative marks you have acquired in the past. Negative marks include collections accounts, liens, judgments, foreclosures and bankruptcies.
Your credit score is much less complicated and detailed than this report, since it uses this report in its formula. Your score will be the three digit number you’d expect, along with brief information about why your score falls in a particular range (you’ll frequently see explanations like “age of accounts” or “credit utilization” which denote that these factors are keeping your score from being higher). One other important thing to keep in mind is that credit scores aren’t created equal.
The Type of Score Matters
Just as the credit reports often have different information between the three bureaus (Equifax, Experian and TransUnion), scores can fluctuate greatly too. We recommend that consumers opt for the FICO credit score, which is most commonly used by lenders. This is preferable to proprietary scores used by the individual bureaus and alternative models like VantageScore and the CE Score. These “FAKO scores” are offered at popular sites that promise free scores and also try to upsell you on credit cards so they can get a kickback. We should point out that there is fluctuation across FICO scores too, depending on the bureau the score is associated with, but it’s still the most authoritative and reliable form of credit scoring. Clearpoint uses the Equifax FICO score.
What’s Changing in Credit Counseling?
While we have always been able to review credit reports with clients, our credit counselors now provide a free FICO credit score as well. This is a significant new benefit to our budget and credit counseling service, and is offered free of charge. So now, our sessions involve a review of your credit report and free access to you score and any accompanying documentation. Getting this information is as simple as going through a counseling session with us and working with a counselor to develop an action plan to achieve your financial goals.
Ready to Get Started?
If you’re ready to take a detailed look at your credit with a professional, contact us today. Getting started is easy—just call us at 800.750.2227 or fill out our registration form, with the information we need to get started.