Your credit score is one of the most important numbers in your life. If you have ever applied for a loan or credit of any kind, your credit score has come into play. If you have ever looked in detail at your credit report, you have probably noticed that lenders look at your credit history in great detail when deciding whether or not to trust you to repay a loan.

The company that computes your credit score is Fair Isaac. In conjunction with TransUnion, your FICO score will be computed in the coming months and years using what is hopefully a more accurate and forgiving formula. There are some people out there with credit scores over 700 that are great borrowers-they can be counted on to make timely and full payments on their loans. There are also people with credit reports that are complete disasters, and these borrowers will have a hard time getting a loan no matter the scenario.

For people with average credit, however, these changes could pay big dividends in helping them to get more access to loans at more attractive rates. The reason is that a lot of the little mistakes that hurt credit scores will no longer count against the applicant. For example, isolated delinquencies will be ignored, so if your gas bill is a couple of days late one month or gets lost in the mail but the rest of your payment history is healthy, the score will disregard the single mistake. In addition, accounts in collection that are under $100 in value will no longer hurt your score, so forgetting to return a movie or a library book shouldn’t take you out of the running for a loan.

It’s a good idea to check your credit report at least once a year to make sure that you’re not being penalized for information that is not accurate. Sometimes a simple mistake in your history can cost you a loan and take months to resolve, so it’s important to act quickly if something is not quite right. Websites such as annualcreditreport.com provide a free credit report once a year where you can look in detail at the information each of the three reporting agencies has for you. Be careful to note that many websites require you to sign up for some type of credit monitoring service before giving you access to your report, so read the small print before accessing your report.

It may also soon be easier for consumers to check their credit report from free through local banks or credit unions. Your credit score is a number that many of your financial goals depend on-hopefully these eventual changes will benefit both borrowers and lenders in rewarding responsible consumers with reasonable financing.

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Tags: credit score, FICO score, free credit report, TransUnion

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