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Credit smarts: What’s a credit score and how do I get my credit report?

Credit & debt, Credit cards

Illustration of a credit score gauge

It’s National Financial Awareness Day, and we’re celebrating by kicking off a monthly series about all things credit. In this series, we’ll try to answer some of the questions we hear most often about credit scores, what goes into them, and how you can establish credit history.

Today, we’re starting with credit scores and credit reports: what they are and how to check yours.

What is a credit score?

According to the Consumer Financial Protection Bureau (CFPB) a credit score “predicts how likely you are to pay back a loan on time.” But your credit scores are used for more than just loans or credit cards.

Many companies will request to see your credit report (more on those below) when you apply for a loan or credit card, rent an apartment, apply for a job, or take out insurance. Having a good credit score increases your chances of being approved, and often results in better interest rates and terms. Utility and phone companies may also check your credit score to determine if they will ask for a new customer deposit.

The first credit scoring system was created in 1958 by Fair, Isaac and Company (known today as FICO®). In 1989, FICO released the scoring system that is now the industry standard. Since their inception, credit scores have been used to demonstrate financial health and creditworthiness. FICO credit scores typically range from 300 to 850. In general, the higher your score, the better your credit.

Where do credit scores come from?

Credit scores are based on information in your credit report which is put together by credit bureaus. Credit bureaus are companies that collect data relating to things like your bill payment history, current unpaid debt, the number of open accounts, and new applications for credit.

Many companies you pay bills to may report payments and other activity to credit bureaus. This allows the bureaus to update your information regularly and create an overview of your credit history. This overview is the basis of your credit report. Credit bureaus use your credit reports and complex scoring models to calculate your credit scores.

Fun fact: You may have more than one credit score, and they probably aren’t the same. Because different credit bureaus have different methods for calculating your score and use different sources of information, you’ll likely notice some variation between one score and another.

So, how do I check my credit score? Credit score scale. Your credit score is determined by information in your credit report.

Checking your credit scores and reports is extremely helpful to understanding your financial health. Each of the three nationwide credit bureaus—Experian, Equifax, and TransUnion—are required by law to provide you with a free copy of your credit report every year at your request. You can check your credit report at AnnualCreditReport.com. Later in this series, we’ll take a look how to read your credit report and correct any mistakes you might find.

There are also a number of apps and tools that provide credit monitoring services. Many of these products advertise themselves as free, but be careful—some charge automatic monthly fees after an initial trial period. Before you sign up, make sure you read the fine print.

What if I don’t have a credit score?

You’re not alone. In 2015, the CFPB published a report showing that 26 million Americans don’t have a credit history with one of the top three nationwide credit bureaus. On top of that, 19 million people have such little credit history that they are considered “unscorable” by the bureaus. All in all, 45 million adults in the United States have no credit score.

Luckily, there are a number of things you can do to start establishing your credit history. One easy way is to make sure any lenders you’re using report to the national credit bureaus. Banks and some lenders, like Oportun, report your loan and payment history to the bureaus. Many alternatives, like payday lenders, do not. When your lender reports your activity and you make your payments on time, you can begin to establish the credit history you need for a car, a home, or whatever comes next.

Next month, we’ll take a look at some of the other options for establishing your credit history and getting on the road to financial success.


The information in this site, including any third-party content and opinions, is for educational purposes only and should not be relied on as legal, tax, or financial advice or to indicate the availability or suitability of any Oportun product or service to your unique circumstances. Contact your independent financial advisor for advice on your personal situation.

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