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The Second PPP Loan: What You Need to Know

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In an effort to encourage entrepreneurship, the SBA has closed the PPP to new loan applications as of Tuesday, May 4. It does have a reserve of funding available to community financial institutions that lend to businesses owned by women, minorities, and underserved communities. 

Applicants who have already submitted their loan application, however, do not guarantee funding. Alternatively, there is a reserve of funds for applications not reviewed by the SBA.

What’s updated for the second round of PPP?

The first PPP loan you can apply for in 2021 may be available if you did not receive one in 2020.

If your business suffered a revenue loss in 2020, you may be eligible for a second PPP loan if you received a PPP loan in 2020.

You will still have to meet the same terms whether you take out your second PPP loan or your first PPP loan.

Similarly to the first PPP loan, the second round of PPP loans are also fully forgivable if they meet the forgiveness guidelines, which stipulate that at least 60% of the loan must be allocated to payroll.

 

These loans carry an interest rate of 1% and a term of five years. You are required to make payments for ten months following the end of the covered period, or until you receive a forgiveness verdict.

Who is eligible for a PPP loan in 2021?

  • Until February 15, 2020, your business was in operation.
  • Your business remains open and operational.
  • A maximum of 500 people work for you
  • You can have no more than 500 employees in each of your locations if you have multiple locations.
  • Your business requires a PPP loan in light of current economic uncertainty.

Second draw PPP loans

If the following statements apply to your business, you are eligible to apply for your second PPP loan in 2021.

  • Your first PPP loan has been used up.
  • Until February 15, 2020, your business was in operation.
  • You are still in operation.
  • A maximum of 300 people works for you.
  • If you operate multiple locations, you must keep your employee count under 300 per location.
  • If gross revenue drops 25% or more, you can demonstrate it.

Showing a 25% or greater reduction in revenue

A 25% or greater reduction can be shown in one of two ways:

  • Using a tax return to compare your annual receipts from 2020 to 2019
  • Your gross revenue in the same quarter of 2020 compared to the same quarter in 2019

Profitability is the amount of money you have earned in a business over a period of time, including sales, interest, dividends, rents, royalties, fees, commissions, reduced by losses, allowances, and returns.

The Q2 2020 gross revenue has to be at least $15,000 in order for a business to use the Q2 2019 gross revenue of $20,000.

How Bench can help

In order to accurately represent a 25% reduction in revenue, comprehensive bookkeeping is imperative. Bench can complete your 2019 and 2020 books, as well as create the profit and loss statements.

In addition to showing your net profit and payroll expenses, having your books done by Bench also determines your eligibility for a PPP loan.

Additionally, you can submit these documents. If your lender requires them, you can submit them with your loan forgiveness application.

When do PPP applications open again?

PPP loan amount calculation

A PPP loan is calculated exactly like the original PPP loan. You can receive a loan of 2.5 times your average monthly payroll cost. Your average monthly payroll cost can either be determined as follows:

  • 2020 is a calendar year.
  • 2019 is the upcoming calendar year.
  • A year before applying for a loan

Food and accommodation businesses

A greater loan amount can be offered to food and accommodation businesses. Organizations with NAICS codes beginning with 72 qualify. You can check to see what the NAICS code of your business is on a website like NAICS.com.

This loan is equal to 2.5 times your average monthly payroll costs, regardless of whether the average payroll is calculated for the calendar year before the loan application, for the calendar year 2020, or for the calendar year 2019.

The maximum second draw loan amount for these businesses is 3.5 times their monthly payroll costs.

Seasonal businesses

To qualify as a seasonal business, you must satisfy one of the following criteria:

  • A calendar year does not include more than seven months of operation.

  • When you earned $100,000 from January through June, you earned no more than $33,330.00 from July through December (e.g. if you earned $100,000 from January through June, you earned no more than $33,330.00 from July through December).

The maximum amount of a seasonal business loan is 2.5 times its average monthly payroll cost. The average monthly payroll cost can be calculated over any 12-week period from February 15, 2019 to February 15, 2020.

A PPP loan for the first time or the second time is treated the same.

Partnerships without payroll

In order to determine the average monthly distributions, partnerships take the 2019 or 2020 Schedule K-1 distributions, multiply them by 0.9236, and divide them by 12.

 

Sole proprietors and independent contractors

Since March 3, 2021, sole proprietors and independent contractors determine their PPP loan amount using their gross income. If they do not run payroll, they use the number on line 7 of their 2019 or 2020 Schedule C. Divide this number by 12 and multiply by 2.5 to find your PPP loan amount.

If you are running payroll, subtract the payroll costs in lines 14, 19, and 26. You can use a maximum of $100,000. Divide this number by 12 and add your average monthly payroll expense. Multiply this number by 2.5 to calculate your PPP loan amount.

The expansion of PPP eligible expenses

Payroll costs, rent, and utilities expenses were eligible expenses for the first rollout of PPP loans in 2020.

With the stimulus bill’s second version, you can now use your PPP loan for the following additional expenses:

What Credit Score Do You Need to Buy a House in 2021?

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What Credit Score Do You Need to Buy a House in 2021
What Credit Score Do You Need to Buy a House in 2021

What Credit Score Do You Need to Buy a House in 2021 : A good credit score is an important factor when applying for a mortgage loan. Not only does it affect your initial qualification for the loan, but it also impacts the interest rate, down payment requirements, and other terms of your mortgage.

Are you considering buying a house and want to be sure your credit is ready? Here’s what you need to know.

How Credit Score Impacts Your Mortgage Prospects

At the beginning of the homebuying process, your credit score will play a big role. It determines which loan types you’ll even consider initially. Some loan types require minimum scores as high as 640 (conventional loans), others go as low as 500 (some FHA loans).

 

In addition, your credit score also impacts the cost of the mortgage. This is because your credit score represents your level of risk to the mortgage lender. Having a high score represents your ability to repay your mortgage in full. As a result, you’ll qualify for lower interest rates.

 

In contrast, if your score is low, it means you are a risky investment for a lender. To make up for the extra risk—that chance of you not paying your loan or foreclosing on your house—they’ll boost the interest rate to protect themselves.  

 

According to the Consumer Financial Protection Bureau, if you purchase a $250,000 home in Texas in 2019 and put 10% down, your interest rate would generally look like this:1

Effect of Credit Score on Loan Rates (2019)

Credit Score Range

Interest Rate

620 to 639

5.25% to 5.99%

640 to 659

4.125% to 5.875%

660 to 679

4.0% to 5.625%

680 to 699

3.875% to 5.625%

700 to 719

3.75% to 5.5%

720 to 739

3.75% to 5.125%

740 to 850

3.625% to 4.99%

Considering this specific loan amount, just a percentage-point difference would mean close to $10,000 in interest savings over the first five years and over half a million dollars over the life of the loan.

The Impact of COVID-19

Since COVID-19 resulted in historically low interest rates, your credit score may play a smaller role in your loan rates than in a typical economy. Consider the following scenario in the current economy:1.4

Effect of Credit Score on Loan Rates (2021)

Credit Score Range

Interest Rate

620 to 639

2.250% to 3.875%

640 to 659

2.250% to 3.875%

660 to 679

2.250% to 3.875%

680 to 699

2.250% to 3.875%

700 to 719

2.250% to 3.875%

720 to 739

2.250% to 3.875%

740 to 850

2.250% to 3.875%

While the pandemic has had a huge impact on interest rates, you cannot anticipate it occurring every year. Therefore, it is important to know how your credit score affects your loan interest rates.

Credit Score Requirements by Mortgage Loan Type

There are four main types of mortgage loans:

  • Conventional loans, which are backed by Fannie Mae and Freddie Mac
  • FHA loans, or those from the Federal Housing Administration
  • USDA loans, which are designated for rural properties and are guaranteed by the U.S. Department of Agriculture.
  • VA loans designed for military members and veterans

Each of these loans has different credit score requirements. Here’s how they break down:

  • FHA loans: Minimum 500, with an average score of 680
  • Conventional loans: Minimum of 620 to 640, depending on the type of loan
  • USDA loans: Minimum 580, though 640 preferred
  • VA loans: No credit score requirement

On FHA loans, your FICO score directly correlates to the amount of down payment you’re required to pay. If your score is over 580, you’ll need at least 3.5%, and if it falls below that, your down payment will be at least 10%.3

What Kind of Credit Report and Score Do Lenders Use?

It depends on who is issuing the credit score (a bank, FICO, VantageScore) and the industry (auto, mortgage, credit card) as to what versions of your credit score you will receive.

 

Most lenders will use a credit report called a “tri-merge” that shows credit details from multiple credit bureaus to offset their risk and ensure they get the most accurate picture of mortgage borrowers.

 

Alternatively, they may use your residential mortgage credit report, which may also include details about your financial circumstances such as rental history or records from public sources. These reports provide information from multiple bureaus, including TransUnion, Experian, and Equifax. 

 

Most often, the credit score you see as a consumer—probably through your bank or credit card company—is different from the credit score a potential lender would see.

Improving Your Credit Score

A number of factors go into determining your credit score, including your repayment history, total balances on your accounts, how long you have had those accounts, and your number of credit inquiries. Improving in any one of those areas can help increase your score.

You can:

  • Pay down your existing debts and credit card balances
  • Resolve any credit issues or collections
  • Avoid opening new accounts or loans
  • Pay your bills on time, every time

Your credit report may also contain inaccuracies or errors that need to be corrected. If you find any, you may want to file a dispute by sending the documentation. 

Your score could be boosted by correcting any errors that you find.

The law permits you to get a free copy of your credit report every year from each of the credit bureaus. However, as of April 20, 2020, the three major bureaus—Equifax, TransUnion, and Experian—will extend the program to one copy every week. 

 

This right has since been extended, enabling people to get a free copy of their credit report on a weekly basis through 2022.

 

How Your Credit Score Is Calculated

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How to Check Your Credit Score With Chase
How to Check Your Credit Score With Chase

How Your Credit Score Is Calculated : Your credit score can have a significant impact on your ability to buy a home. It can at the very least determine what house you will be able to afford.

 

The credit score ultimately affects the amount of money a lender will approve for your loan, as well as the interest rate and the other conditions. Before you purchase a home, you should understand your score—and know what can negatively impact it.

What Is a Credit Score?

A credit score is a number lenders use to estimate risk. They tend to believe that individuals with a higher credit score are less likely to default on their loans. The higher your credit score, the more your financial history suggests that you will be a responsible borrower.

How Are Credit Scores Calculated?

In order to calculate your credit score, the three major credit reporting agencies don’t necessarily use the same scoring software, so don’t be surprised if the scores they generate for you differ.

 

The Fair Isaac Corporation is frequently credited with the creation of the software used to calculate credit scores, however VantageScore also finds wide use.

The Most Important Numbers

This illustrated pie chart illustrates how your credit score is calculated according to its contribution to each of the following factors:

  • Your payment history—35%
  • Amounts you owe (your credit utilization ratio)—30%
  • Length of your credit history—15%
  • Types of credit used (your credit mix)—10%
  • New credit—10%2

Payment History

A payment history implies how many accounts you paid on time. It also indicates any public records negative or collections included under your name as well as information on delinquent accounts. The delinquent account information will include:

  • Total number of past due items
  • How long have you been past due?
  • How long it’s been since you had a past due payment3

You won’t be able to make a credit card payment or a loan payment if you’re late.

What You Owe?

Your credit score reflects the sum of your loan balances and the percentage of your revolving credit lines you’re using compared to your credit limit.

  • How much you owe on accounts and the types of accounts with balances
  • How much of your revolving credit lines have you used – looking for indicators you are overextended (this is your credit utilization ratio).
  • Keeping an eye on the amount you owe on your installment loan accounts compared to the original balance—to make sure you’re repaying them consistently.Number of accounts with a balance

Length of Credit History

The length of your credit history is important to lenders; it allows them to see how long you have had credit and built a good credit history. The longer your history, the higher your credit scores.

  • The total length of time tracked by your credit report
  • Length of time since accounts were opened
  • The time that’s passed since the last activity5

Types of credit

Credit reports with a mix of accounts usually generate better scores compared to reports with only a few revolving accounts (such as credit cards). Your credit score will be based on how diverse your credit mix is among credit types:

  • Short-term installment loans such as auto loans
  • Long-term installment loans such as a mortgage
  • Revolving credit such as credit cards or home equity lines6

Your New Credit

The final category influencing your score is your new credit. This factors in items such as:

  • How many accounts you’ve recently opened
  • The proportion of new accounts to total accounts
  • The number of recent credit inquiries
  • The time that’s passed since recent inquiries or newly opened accounts
  • If you’ve re-established a positive credit history after encountering payment problems
  • That you aren’t generally attempting to open numerous new accounts7

What’s a Good Credit Score?

Your credit score ranges from 300 to 850. The higher your score, the more of a risk a lender believes you are. As your score rises, your interest rate will probably go down.

 

Mortgages typically offer better interest rates for borrowers with credit scores above 670, but don’t let that discourage you if your scores are lower since there’s a mortgage product for just about everyone.

 

Experian reports that the average credit score in the U.S. reached a record high of 710 in 2020. Furthermore, 69% of Americans had a “good” score of at least 670.

Improving Your Credit Score

Your credit score will rise if you focus on any of these areas—mostly the first two—for a few months. Be patient, though. It takes time to build a strong credit history.

What Is a FICO Score?

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What Is a FICO Score
What Is a FICO Score

A FICO score is the branded version of credit score most widely used by the nation’s largest financial institutions to make credit and loan approval decisions.

What Is a FICO Score? 

There are 27 million FICO scores sold each day, and 90% of all lending decisions in the United States are based on one. If you’re looking into your credit report or applying for a loan, you’ll probably come across your FICO score.

Equifax, Experian, and TransUnion—the three major credit bureaus—calculate scores using FICO Formulas and detailed information they keep on your credit history. Credit Scores range from 300 to 850, with higher scores representing a smaller risk to lenders.

 

Credit scores between 700 and 750 are considered excellent, while scores below 650 are generally considered bad, while scores below 600 are very poor. It’s important to understand, however, that different lenders have different standards, and they’re all looking at different issues on your report. 

Having a credit score of 675 will allow you to get a mortgage, but you won’t be approved for a specific type of credit card. No matter how low your credit score may be, you can start building a better one today.

You can purchase your FICO scores from the three major credit bureaus by visiting myFICO.com

 

banks, credit unions, credit card issuers, and other financial services include a free FICO score with your monthly statement. You can also request a free copy of your credit report, which will include your FICO score, every 12 months from each of the three major credit bureaus.

How FICO Scores Work

Your FICO score is based on five key pieces of information:

  • Payment Timeliness: This accounts for 35% of your score. If you pay late, what is the duration of the delay? Have there been any collections calls? Have you had any bankruptcies or foreclosures? more negative marks you have and the more severe they are, the more your score will be impacted.
  • Debt : The amount of debt you have can have a negative effect on 30% of your score. Credit bureaus look at what’s called your credit utilization ratio. Your score usually goes up when you don’t use more than 30% of available credit. 
  • Longevity : Your score will be enhanced if you keep your combined balances below the $3000 mark, so if you have credit cards with combined limits of $10,000, you will want to keep them below that number. The length of your credit history counts for 15% of your score. How long have you had your accounts open for on average? If you’ve used credit responsibly for decades, you’ll probably have a higher score than someone with a shorter credit history.
  • Credit inquires: Credit inquiries account for 10% of your credit score. If you apply for credit frequently, lenders may view you as a risk, which will lower your score. People seeking more credit might be experiencing cash flow challenges, which is a big red flag for lenders.
  • Account mix: About 10% of your score is attributed to the mix of credit accounts you have. This includes all types of loans: mortgage, auto loan, student loan, credit card. The more accounts you have, the better your credit rating. Build a diversified portfolio over time.2

What’s Not Included in Your FICO

FICO scores cannot be determined by anything discriminatory, such as your sex, your marital status, your religion, or nationality.

 

FICO also states that it does not consider information such as where you live, your job, salary, or your credit accounts’ interest rates. 

 

Soft inquiries into your credit do not impact your FICO score, including your own requests to check your credit report, requests made by potential employers, or inquiries made by lenders for pre-approval offers.

Notable Happenings

A consortium of Fair, Isaac, and Company engineers was established in 1956; the organization’s name comes from the Fair, Isaac, and Company company. was to improve business decisions by using data intelligently. Fair and Isaac developed and sold their first credit scoring system in 1958.

 

Since 1991, FICO scores have been available to all three of the major credit bureaus. By the mid-1990s, Fannie Mae and Freddie Mac began using them for mortgage lending. In 2009, FICO officially changed its brand name and stock symbol to FICO.

 

Over the years, FICO has evolved in many different versions. The most recent one, FICO 9, has reduced the effect medical debt has on consumer credit scores. Not all lenders, however, are moving forward with the latest version at the same pace. 

 

It’s important to know the system that your lender uses, as many still rely on FICO 8, and some may use more than one

FICO & FAKO Credit Scores

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FICO & FAKO Credit Scores
FICO & FAKO Credit Scores

FICO & FAKO Credit Scores : On some websites, blogs, and books you might read about credit scores called credit scores or FICO scores. You can even see them referred to as VantageScores, a newer model. 

 

Another credit score term that gets thrown around in forums and blogs is the FAKO credit score. What are all these different scores? Which one means what?

Credit Score Is a Generic Term

Think of credit score as a generic term that refers to the numerical value given to the history of your credit. Your credit score is determined based on the information contained in your credit report and indicates whether you have a good (high credit score) or bad (low credit score) credit history.

 

Several companies offer credit scores, and the three major credit bureaus each offer their own variant of the credit score. In addition, the three credit bureaus have collaborated and produced their own credit score, the Vantage Score.

FICO Is a Brand of Credit Score

For those analogically inclined, the FICO score is the most well-known credit score. It is a branded credit score, developed and published by a company known as FICO, formerly Experian. 

 

Credit score is like a band-aid to FICO. To make matters even more confusing: the FICO score is often referred to, but other credit scores exist as well.

What About FAKO?

Typically, FAKO scores are simply credit scores that weren’t generated by MyFICO.com. They are used only for educational purposes and do not reflect the credit scores lenders actually use to approve your applications. 

 

Even when a FICO score is purchased online, the one your lender uses may not match the one you have because there are many versions of the FICO score, versions for various industries, and previous versions introduced years ago.

What’s the Difference?

As far as we know, all the credit scores are generally calculated the same, with the exception of the VantageScore, which gives different weights to credit report information. 

Since we cannot see the exact formulas, we’re unable to determine specific differences.

 

Whenever possible, lenders and creditors receive their credit scores from the company they do business with. The score could come from a credit bureau or FICO score, or from the lender itself. You will only know it if your lender tells you.

 

You are required to obtain a copy of your credit score from every lender when your credit report was the reason for their decision to either deny or approve you for less favourable terms.

Which Should I Care About?

In this day and age, too many credit scores exist for you to improve all of them individually. If you strive to improve your credit, you should rely on your FICO score. By improving your FICO score, you can improve your other credit scores too. 

 

You can only buy your FICO score if you receive your credit report information from Equifax and TransUnion. Experian has stopped allowing FICO to sell consumer credit scores based on Experian’s credit report information.

Your Credit Scores Are Different For Different Reasons

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Your Credit Scores Are Different For Different Reasons
Your Credit Scores Are Different For Different Reasons

Why You Have Different Credit Scores :You might have noticed that your credit scores are different at the three credit bureaus if you have ever purchased a three-in-one credit score or used free credit scores from multiple sites in a single day. Different credit scores are common; here’s why that happens.

Scoring Models

There are dozens of credit score models, and each one can give you a different credit score. For instance, each of the three credit bureaus has its own model for calculating your score, and the bureaus partnered to formulate the VantageScore

 

Banks and other screening services may also have different credit scoring models. One of the world’s most widely known credit scoring companies has its own credit scoring model.

 

FICO and the credit bureaus release new versions of their credit scoring models periodically. Many lenders continue to use older models, since adoption rates for new models can be slow.

Report Data

The credit bureaus normally do not share data with each other. Some creditors and lenders might only report to one or two of the credit bureaus. In this case, your Equifax, Experian, and Trans Union credit reports will differ from each other depending on the information contained in each report.

 

Experian calculates your credit score using data from its credit report; for example, if you have a collection account listed on your TransUnion credit report, but not on your Experian credit report, then your TransUnion credit score might be lower.

Which Is Your Lender Using?

Lenders have established relationships with one or more of the credit bureaus. You may ask your lender from which credit bureau they purchase credit scores (they may or may not tell you), but you cannot request that the lender use a specific credit bureau to retrieve your score.

 

A lot of lenders use the FICO credit scores developed by FICO, the company formerly known as Fair Isaac. Your credit scores can be obtained from myFICO.com on credit reports from Equifax, Experian, and TransUnion.

Scores You Don’t Know About

A few industry-specific credit scores are available directly to businesses; however, they cannot be purchased directly. These include an auto insurance score, bankruptcy prediction score, and mortgage credit score. 

There has been no research done on how these scores compare to generic credit scores available online, so they won’t match whatever you purchased online.

Is Checking Your Credit Score Worth It?

Even though the credit score you are checking might not match the credit score your lender uses, it’s still important to check your credit score, so you can get a free credit report or make use of a credit monitoring service to get your score. 

 

Getting your credit score will give you a good sense of whether you have poor credit or good credit. You’ll feel more confident about the chances of getting a new credit card or a personal loan if you have a good credit score. 

Make sure you look at at least one credit score for each of your three credit reports so you have a complete picture of your credit.

 

How to Check Your Credit Score With Chase, Amex, and More

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How to Check Your Credit Score With Chase
How to Check Your Credit Score With Chase

How to Check Your Credit Score With Chase : Today you can get free credit scores from many websites that offer them; you just have to sign up for an online account. Many credit card companies offer them too — some even offer them to everyone, even if you’re not a cardholder. 

 

If you are eligible, you will be able to get a free FICO or VantageScore from one of the three major credit bureaus. You can sign up for more than one of these services so that you get a better picture of your score across all bureaus.

American Express

The American Express primary cardholder can access an Experian FICO 8 credit score, provided there is enough account activity in a billing month to receive a billing statement. If you haven’t used your card for the month, however, you won’t receive a credit score. 

 

New Cardmembers can access their FICO scores within 24–48 hours. You can access your credit score by logging into your American Express online account.

 

The TransUnion VantageScore 3.0 (and access to TransUnion credit reports) is available for all consumers at no additional charge through MyCredit Guide, which updates its credit scores weekly2.

Bank of America

The Bank of America credit cards will allow you access to your TransUnion FICO scores for free. Log into your online account to view your free TransUnion FICO scores, which are updated monthly.

Barclays

You can gain free access to your TransUnion FICO credit score by logging into your online account, which is free for Barclays cardholders. Check the terms of your credit card.

Capital One

Capital One’s CreditWise tool allows consumers to view their VantageScore 3.0.4 and CreditWise login information. Capital One cardholders may use their Capital One login information to reach CreditWise.

Chase 

A free credit score from Chase was previously only available to holders of its Slate card. With the launch of Chase Credit Journey, the service is now available to all consumers—not just those who have a Chase credit card.

Creating an account will give you access to your TransUnion VantageScore 3.0.

Citi

You can obtain a free credit opinion by connecting with Citibank. If you’ve already got a Citibank credit card, you will receive a free Equifax credit score each month by logging into your account.6

Discover

Credit Scorecard for Experian gives everyone the ability to see what their credit score is at any given time. Your credit score is updated at least once every thirty days when you log on to your Discover account.

U.S. Bank

By logging into their TransUnion online account, U.S. Bank cardholders can get their free TransUnion credit scores each month.8

Wells Fargo

Primary Wells Fargo cardholders have free access to their Experian 9 credit score, which is updated monthly, as well as tips to help them increase their score.

Taking Advantage of Free Credit Scores

Free credit scores you get online aren’t necessarily the same as the scores lenders will pull to determine whether to approve your application. Lenders typically use a credit score specific to their industry while online consumer credit scores are for education purposes only.

 

Your credit score is a snapshot of your financial history at a particular point in time. Credit reports, which serve as the basis for your credit score, change often. Anything that has changed since you’ve pulled your credit report can also cause a change.

 

Free credit scores are great for keeping tabs on how your credit is changing, but purchasing an industry FICO score will provide you with a better picture of what a bank will see if you apply for a loan or credit card.

Free Credit Score No Credit Card Needed

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Free Credit Score No Credit Card Needed
Free Credit Score No Credit Card Needed

free credit score no credit card needed : A consumer may be entitled to see their credit report free of charge. However, while it is easy to find a website offering free credit scores, it can be challenging to find a website that offers a truly free credit score without asking for your credit card number. 

 

If you want to see your credit report before you actually have a credit card, this can be a catch-22.

 

If something is supposed to be free, you shouldn’t have to give your credit card number for it. Luckily, you don’t have to give up your credit card number. Learn how to get your free credit score without giving your credit card number.

Credit Scores With a Catch

Many sites offering free credit scores have a gimmick where they use the promise of a free score to lure you in. However, to get a free credit score, they require you to sign up for a trial subscription to an unauthorized credit reporting agency.

 

Many sites require you to pay a monthly fee to have access to your scores after a free trial period.

Sites With Free Credit Scores

There are quite a few websites that offer free credit scores without a credit card or subscription. Here are just a few of them:

  • Consumers may sign up for Capital One CreditWise even if they do not have a Capital One credit score. You will receive a monthly update of your VantageScore 3.0 based on your TransUnion credit report.
  • With Credit Karma, you’ll get your free credit score that’s created from an analysis of your Equifax & TransUnion scores, as well as VantageScore & insurance scores. While you may be asked for your Social Security number and other identifying information, you’re never asked to give your credit card number. Best of all, you can check your credit score every day if you want.
  • Credit Sesame’s goal is to connect you with ways to lower your debt payments by offering you refinance and low interest rate credit card options. You get your free credit score with no credit card required, and the results are immediate.
  • Discover provides a no-cost free credit scorecard that includes your FICO score based on your Experian credit report. The scorecard is updated monthly and you don’t have to be a customer of Discover to enroll.
  • You can receive a free copy of your VantageScore 3.0 and receive monthly updates on your score. You’ll also be able to see the factors that affect your credit score.
  • Quizzle, a Bankrate product, offers free access to your Experian credit score and credit report, no credit card required. Your score is updated every week.

Required Credit Score Disclosure

As part of the Fair Credit Reporting Act, you are entitled to one free annual credit report from each of the three major credit bureaus. All you need to do is request yours at annualcreditreport.com.1

 

Although the law does not give consumers access to their credit scores, which are not included on credit reports, banks, lenders, and credit card companies are required to provide a free credit score each time they deny your application, provide you with less favorable terms, or raise your rates.

 

Mortgage lenders also must disclose your credit score when they check your credit for a loan application.

You won’t always get the free credit score, even if you’re denied. For example, banks don’t have to send a credit score disclosure when they use an internal credit score.

 

and insurance companies are not required to provide the credit score used to assign your insurance premium. If you’re denied credit or insurance, however, you should inquire about your score.

Not a FICO Score

Except for the Discover Credit Scorecard, the drawback to free credit scores is that the scores may not be FICO scores, the scores that lenders use most often. 

 

FAKO scores may differ from one another and from your FICO score. Credit Karma, Quizzle, and Credit Sesame all give you a credit bureau’s version of your credit score (i.e. a FAKO score).

 

An educational credit score is not included in your FICO score if the bank used a FICO score in the decision making process. Otherwise, you will get another score, rather than your educational score.