The finance world seems to be divided on the topic of credit scores (even if there are free credit scores) and their importance.
Some are all about using their credit to their advantage, whereas others do not care about their credit history at all and think it’s unnecessary and evil.
I’m on the pro credit side. I think your credit history can be used to your advantage, so why not work to improve it?
Plus, you can check your credit score for free. Just click here to find out what your credit score is.
As a background for why we care about our credit right now: We are in the very beginning stages of buying a new home. Since we are both self-employed, obtaining a mortgage is a little more difficult. Having a great credit score is one of the areas where we will be analyzed. We also care about our credit because we like to use credit cards with great rewards programs.
Why is your credit score important?
There are too many people out there who have no clue what their credit score is. Too many people also have never checked their credit report. It doesn’t make much sense since you can get your free credit score easily and you can even get your credit score online for free.
I think this is a MAJOR problem.
Your credit score and credit history are important. You can leverage them and use them to your advantage. Yes, it is possible to have the credit system on your side and have the highest credit score you’ve ever had.
A credit score usually means you can keep more of your money because you will receive lower interest rates on your home or car loan. For example, if you have an excellent credit score, you may be able to qualify for a 0% car loan. However, if you had a bad credit score, you may receive a 24% interest rate on your car loan. Yes, that does exist…
Also, if your credit score isn’t high enough, you may even be completely denied a loan. You may have to pay higher rates or pay larger deposits because you are deemed more risky.
Overall, a good credit score can help you in life.
In the next few weeks, I will talk discuss what is a good credit score, but for today we will talk about why a credit score is important.
When will your credit score be checked?
How some go about with never needing their credit score or credit report is beyond me. Good for those of you who do not need it, but I think most people enjoy having a credit history.
There are many instances where your credit score and/or credit report may be looked at, and sometimes they have nothing to do with a loan.
Home and car insurance – If you have car or home insurance, your rate may be calculated on one factor that you did not know about – your credit score. If your credit score isn’t good, then you may actually be paying more because companies may consider you to be more risky.
Employer – This might be shocking to hear, but there are some employers out there who will check your credit report (with your permission). Industries that often check your credit report include those that deal with financial services, chemical, and defense.
Renting a home – If you have decided that you don’t want to own a home, do not think that you have escaped having your credit history checked. Your landlord will most likely check your credit history. They will want to know if you pay your bills on time or if you have skipped bills entirely. This will say a lot about you as a renter, whether you want to believe it or not. If your credit history is not something they want to see, you may be denied the rental altogether, you may be asked to pay multiple months at once, or you may be asked to find a co-signer just in case you fail to pay your rent.
Credit cards – If you don’t care about credit, then you probably will not care about this one. However, if you want a credit card, especially one with a good rewards system in place (learn more at How To Take A 10 Day Trip To Hawaii For $22.40), then you will want a higher credit score. The good reward credit card offers and acceptances are usually only available to though with good or excellent credit scores.
Loans (home, car, etc.) – If you apply for a loan, your credit score and credit history will definitely be checked. Before you are approved for a loan of any sort, the lending institution is going to thoroughly check your financial history so that they don’t end up losing money on your loan. There are a lot of expenses that go into owning a home, so getting the lowest interest rate possible is very important.
Credit Sesame Review
I once signed up for a free credit score company who used to have those catchy singing commercials. I thought it they were supplying a free credit score, and I remember being charged months later. I didn’t catch the charge the first time either, and I was actually charged a few times before I noticed.
Yes, yes, I know. I’m a personal finance blogger who made a huge mistake!
However, that was a long time ago and I have learned from my mistakes. And that’s why I want to do a review on Credit Sesame so that you can check your credit score for free.
If you are looking for a truly free credit monitoring service, then Credit Sesame is for you. Other companies say that they are free, but they usually charge you a fee later on when you probably won’t notice. Credit Sesame doesn’t ask for your credit card, so there is NO WAY that they can secretly charge you later.
Credit Sesame uses the Experian National Equivalency score, whereas most lenders will look at the FICO score. However, the scores are usually fairly similar.
Okay, so you’re probably wondering how everything is free. They must make money somehow right? Well, yes they do. Credit Sesame makes money by showing you different home loans and credit cards you may qualify for. If anyone clicks on these links, then they may make money that way.
Your next question may be “Will checking my free credit score on Credit Sesame hurt my score?” Nope! It is just a soft pull so it will not affect your credit score.
If you are interested in checking your FREE credit score through Credit Sesame click here. It’s completely free.
How often do you check your credit score? Are you trying to increase your credit score? Why or why not?
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Great post! I’ve been procrastinating with checking my credit score…it’s been at least three years. And I know better….I was once turned down for an awesome job because my score was too low after a nasty divorce. You’ve inspired me to get crack’n. Thanks much.
Welcome Kate 🙂 That really stinks about the job!
I love making credit work for me. I never pay interest (knock on wood) and don’t intend to. But small slip up could cost me in my score though!
Jay
Lets hope neither of us messes up 🙂
I don’t check my credit score as often as I should, but I check it about once a year. I’d like to do something like Credit Sesame or Karma where I could ballpark my credit more often – I just am curious about things like that 🙂
You should! It’s free 🙂
Yes, everyone is different! We are working on our credit score since we want to buy a home within the next 1.5 years.
Oh no! I will look into that. I do think Credit Sesame is only open to those in the U.S.
When my in-laws applied for a mortgage last June, they really had a hard time since they don’t use credit card ever since, they prefer to use cash all the time. It almost took them for about 2 months to get approved because the company told them that they don’t have any credit score to refer, they just did a thorough background check.
Interesting to hear! I wonder how that would work if the person was self-employed.
Our credit score is pretty phenomenal after running up a bunch of debt and then paying it off.. It’s one of the strange side effects of getting yourself in trouble. 🙂
Haha good job!
I never knew credit scores were so important especially if you are going to be paying 24 % in interest on a car loan
Yes, credit scores are very important! 🙂
I check my score using credit sesame every month too. They even send me an email when my score has been updated for the month. I love it!
Awesome!
I’m on the pro-credit side! I use credit cards to my advantage and almost always pay them off in full. Once in a great while I will strategically carry a balance from one month to the next, but overall I’ve received much more in rewards than I’ve paid in interest, so it’s totally worth it to me. Having an excellent credit score has meant getting low rates on a mortgage and car loan, which is obviously also a huge savings.
I’ve never personally had a job check my credit as a condition of employment, but I work for county government and for certain jobs we do check credit scores. Corrections officers comes to mind, because if they are in financial trouble they may be more likely to accept a bribe, which could potentially put security at the jail at risk.
It’s actually been awhile since I’ve checked my credit report, since I haven’t applied for any loans or lines of credit in a few years now, but I really should start doing it more regularly in order to catch identity theft early. Oops?
Good to hear about a job that does credit checks. I never even thought about that type of job doing one. Makes complete sense.
I’m definitely on the pro credit side like yourself. I love getting new credit cards every few months for rewards. What’s cool is now a lot of credit card companies allow you to track your score for free, and I can see that getting more credit is actually RAISING my score over time. Pretty cool. Great post.
Thanks Syed!
I love Credit Sesame. I am glad I have it and the information they provide is good to have.
I have an account with both Credit Sesame and Credit karma (both free) and they work excellent. I also pull my report from each of the three bureaus once per year, quarterly. This allows me to see it throughout the year, and I get a sense of which bureau is reporting/showing what.
Good job!
It was great to know about Credit Sesame and Credit karma. I was never aware of them. It will definitely help me and a lot of us.