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Ready for some good news? If you want to check your credit score, you can do so without worrying about lowering it.

So why is it so common to think that will happen?

It’s easy to see where the confusion stems from, so let’s look at what a credit score is, why checking a credit score isn’t a bad thing, and where credit damage can actually come from.

Credit Scores: A Refresher

First things first: A credit score is a number based on a credit report that helps creditors determine how risky it would be to lend money to a borrower.

The risk level influences if an applicant is given credit, and if so, the terms and interest rate. Having a high credit score can make it much easier to take out a loan and get more favorable interest rates, or be approved to rent an apartment.

The information in a credit report determines a credit score. The following factors influence a credit score:

•   Payment history

•   Outstanding balances

•   Length of credit history

•   Applications for new credit accounts

•   Types of credit accounts (such as mortgages or credit cards)

Consumers don’t actually have just one credit score; they have multiple credit scores. Scores are calculated by credit reporting agencies that maintain credit reports. Lenders can use their own internal credit scoring systems as well.

Recommended: What Is Considered a Bad Credit Score?

Does Checking Your Credit Score Lower It?

Nope. There are many misconceptions surrounding credit scores, and one of the biggest ones is that checking one’s credit score will lower it. This is simply, and happily, not true.

Checking your credit score once, or even multiple times, will not damage it. Requesting a copy of a credit report will also not damage a credit score.

In fact, it’s good to keep a close eye on your credit report and score. It can be especially helpful to review a credit report on occasion to make sure there are no errors that may cause the score to drop.

Online tools like a spending tracker app can allow you to track your credit score regularly and get important insights into your spending habits.

Recommended: What Is the Difference Between Transunion and Equifax?

What Can Lower a Credit Score?

Certain credit inquiries made by outside parties like lenders and credit card issuers affect a credit score.

You’ve probably heard of soft and hard “pulls,” or, formally, soft and hard inquiries. Only hard inquiries — a full check of credit history — affect a credit score.

Examples of Soft Inquiries

•   You check your own credit report.

•   An insurer pulls credit for a quote.

•   A company views a credit report during a background check.

•   You seek to be prequalified for a personal loan or mortgage.

•   A credit card or insurance issuer sends a prescreened offer — sometimes called a “preapproved” offer.

Examples of Hard Inquiries

You apply for a:

•   Mortgage

•   Auto loan

•   Credit card

•   Student loan

•   Personal loan

•   Rental

Hard inquiries may stay on a credit report for two years, although they usually only affect credit scores for one year.

Multiple hard inquiries in a short time frame could make a customer look higher risk because it could suggest an intention to rack up debt. Then again, if you’re shopping for an auto loan or mortgage, multiple inquiries are generally counted as one for a period of time, typically 14 to 45 days. The exception generally does not apply to credit card inquiries.

Consumers can see these inquiries on their credit report.

When to Check a Credit Report

Consumers should consider checking their credit report at least once a year to make sure there are no errors that are hurting their credit score and that their report is fully up to date. Regular checks can also alert consumers to fraud and identity theft.

It can also be smart to check a credit report before making a big purchase that requires a loan.

Doing so can even be helpful when job searching, as some employers review credit histories when hiring.

Are Free Credit Reports Safe?

Consumers are entitled to a free (and completely safe!) credit report once a week from the three major credit reporting bureaus:

•   Equifax

•   Experian

•   TransUnion

There are a few ways to gain access to these free reports.

•   Online at AnnualCreditReport.com.

•   By phone at (877) 322-8228.

•   By mail. After downloading and completing the Annual Credit Report request form, consumers can mail the completed form to:

Annual Credit Report Request Service

P.O. Box 105281

Atlanta, GA 30348-5281

Note: These free credit reports do not include credit scores. They are meant to allow an individual to ensure accuracy and check for identity theft.

To monitor credit throughout the year, it can be a good idea to space out the requests for these free reports, but requesting them all at once is totally fine.

Additional free reports are available to those who experienced an “adverse action” because of their credit report, are unemployed, and certain other situations.

The Takeaway

Does checking your credit score lower it? Not at all, and in fact, it’s a good idea to keep an eye on your credit landscape. Your own inquiries are different from outside hard pulls, which can happen when you apply for a mortgage, credit card, student loan, auto loan, or something that requires a full check of credit history. A hard inquiry could stay on a credit report for two years, though it typically only affects a credit score for a year.

Checking your credit report at least once a year is a good way to ensure there are no errors that could damage your score. It’s also a good idea to keep tabs on your finances year-round.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

About the author

Jacqueline DeMarco

Jacqueline DeMarco is a freelance writer who specializes in financial topics. Her first job out of college was in the financial industry, and it was there she gained a passion for helping others understand tricky financial topics. Read full bio.

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SORL-Q225-010

A credit reporting agency compiles credit reports and provides that information to prospective lenders and others. Today, there are three main credit reporting agencies in the U.S.: TransUnion®, Equifax®, and Experian®. Though each agency serves a similar purpose, there may be some differences in the type of information found in their credit report.

Let’s take a closer look at credit reporting agencies and the differences between TransUnion and Equifax.

What Is the Role of Credit Reporting Agencies?

Credit reporting agencies, also known as credit bureaus, collect the information necessary to maintain credit reports. All credit reporting agencies manage their own records, which means the information they have about a consumer can differ depending on the information that was reported to them. While the reports may vary, no one credit reporting agency carries more weight than the other.

What Are Credit Scores?

A credit score is a number used by lenders to determine the risk level associated with lending money to a consumer. A borrower’s credit score can influence if a lender decides to work with a borrower and if so, how much credit, what terms, and how high of an interest rate they end up getting.

Credit scores are based on a consumer’s credit report. Everyone has more than one credit score as these scores are calculated by the three main credit reporting agencies.

Some lenders use internal scoring models as well, but generally, it’s more common for lenders to use one of the three main agencies’ reports to inform their lending decisions.

Recommended: Which Credit Bureau Is Used Most?

What Are Credit Reports?

A credit report details information about a consumer’s financial life, such as:

•   Payment history

•   Outstanding balances

•   Length of credit history

•   Applications for new credit accounts

•   Types of credit accounts (such as mortgages or credit cards)

Credit reports from each of the three major credit bureaus can be accessed weekly free of charge via AnnualCreditReport.com.

Need help keeping tabs on your finances year-round? Consider using a spending tracker, which can be useful when it comes to making progress toward short- and long-term financial goals.

Recommended: What Is Considered a Bad Credit Score?

How Does Equifax Calculate Credit Scores?

An Equifax credit score isn’t used by lenders or creditors to assess a consumers’ creditworthiness. Instead, many lenders use FICO Scores® to help determine a potential borrower’s creditworthiness. FICO uses credit scores from the three reporting agencies, including Equifax and TransUnion, to determine their score. Equifax recommends aiming for a score of 739 or higher if a “good” score is desired.

The Equifax credit score model falls on a credit rating scale that starts at 280 and ends at 850. The higher a score is on this scale, the better indication that the consumer poses a lower risk to creditors.

TransUnion and Equifax calculate credit scores differently. An Equifax credit score is an educational credit score. The point of this credit score is to provide consumers with the knowledge to help them predict their general credit position.

How Does TransUnion Calculate Credit Scores?

When it comes to TransUnion credit scores, this agency uses an outside model, the VantageScore® 3.0 model. The VantageScore scoring model ranges between 300 and 850 points. According to TransUnion, a “good” credit score to have on the TransUnion and VantageScore 3.0 model is between 661 and 780. VantageScores are an alternative to FICO Scores that are used by some lenders to inform their lending decisions.

What They Offer

Alongside credit scoring and credit reports, both of these credit agencies have unique offerings to help consumers understand their credit better and to provide protection against fraud.

TransUnion Offerings

TransUnion members ($29.95 per month) gain access to:

•   Unlimited access to credit score and reports that are updated daily

•   Recommendations to help improve credit score

•   Their product, Credit Lock Plus, which allows individuals to lock their TransUnion & Equifax reports

•   Up to $1 million in identity theft insurance

Equifax Offerings

Signing up for Equifax Complete ($9.95 per month) gives members access to:

•   Equifax credit report monitoring

•   Daily access to VantageScore credit score and Equifax credit report

•   Dedicated ID restoration specialists to help members recover from identity theft

•   Up to $500,000 in identity theft insurance

TransUnion vs Equifax: Which Is Most Accurate?

So, which credit report is most accurate? When it comes to accuracy, all three credit reporting agencies are responsible for ensuring that credit reports are accurate. No one agency is more accurate than the other. That being said, mistakes can happen.

Consumers may want to keep a close eye on their credit report to make sure that mistakes haven’t occurred — especially as these mistakes can negatively impact credit scores. To report errors found on a credit report, consumers can follow this process:

1.    After finding errors on a credit report, write a letter that disputes these errors and include any supporting documentation that can strengthen the case against the error. You can find a sample letter here .

2.    Send the letter and documentation to the credit reporting agency and the information provider (like a bank or credit card company) that reported the inaccurate information to the credit reporting agency in question. Both the credit reporting agency and the information provider will be responsible for fixing credit report inaccuracies or incomplete information.

3.    If the written dispute does not result in the mistake being resolved, the next step would be to file a complaint with the Consumer Financial Protection Bureau.

TransUnion Disputes

TransUnion disputes can be filed on their website or by mail. After the documentation has been received, it can take up to 30 days to resolve the dispute.

Try to include as much of the following information as possible in the communication:

•   Name

•   Partial account number of the disputed item (from credit report)

•   Current address

•   TransUnion file number (if applicable)

•   Social Security number

•   Date of birth

•   Name of the company that reported the item that needs disputing

•   Reason for the dispute

•   Any corrections to personal information that needs to be made

Disputes can also be made by phone.

Equifax Disputes

Equifax disputes can be made online, by phone, or by mail. Consumers will generally want to provide as much of the following information and documentation as possible or applicable:

•   Valid driver’s license

•   Birth certificate

•   Copy of a utility bill

•   Current bank statements with account information

•   Letters from a lender showing the account in question has been corrected

•   Proof that an account error was the result of identity theft

•   Bankruptcy schedules and other court documents

•   Student loan disability letters

•   Canceled checks

Results are generally completed within 30 days.

No matter which agency you use, it helps to have a holistic view of your finances. Using a money tracker app is one way to help you manage your spending and saving.

Recommended: What Credit Score Is Needed to Buy a Car?

The Takeaway

TransUnion and Equifax are two of the major credit bureaus in the U.S. They collect information about a consumer’s financial life, such as their payment history, applications for new credit, and existing credit. This information is recorded in the form of a credit report. Based on information in the credit report, each bureau determines credit scores based on their own scoring model. However, TransUnion and Equifax calculate credit scores differently, and both have unique offerings that help consumers better understand their credit and protect themselves in the event of fraud.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

About the author

Jacqueline DeMarco

Jacqueline DeMarco is a freelance writer who specializes in financial topics. Her first job out of college was in the financial industry, and it was there she gained a passion for helping others understand tricky financial topics. Read full bio.

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SORL-Q225-002

When you buy a home, you’re likely paying more than just the down payment and closing costs. You’ill probably also need to purchase homeowner’s insurance. While this coverage is not mandated by law, many mortgage lenders require it before they agree to finance the purchase of your home.

Here’s what first-time homebuyers need to know before shopping for homeowners insurance.

What Does Homeowners Insurance Cover?

Homeowners insurance coverage usually provides protection for both a home and its contents against damage, theft, and up to 16 named perils, including fire, hail, windstorms, smoke, vandalism, and theft. It also typically includes personal liability coverage for accidents that may happen on the property (think of people slipping and falling down your stairs, or your dog biting a neighbor on the property).

On the flip side, basic homeowners insurance likely won’t cover damage from disasters such as floods and earthquakes, and even war (seriously). Homebuyers who live in an area prone to certain events or natural disasters may want to consider supplemental coverage. In some cases, their lender may even require it.

It’s a good idea to learn what’s generally covered by each homeowners insurance policy type — and what isn’t — to ensure you have the right protection in place.

Recommended: Mortgage & Homeowners Insurance Definitions

When You Need to Buy Homeowners Insurance

If buyers plan to get a mortgage to purchase their home, their lender will likely require they obtain homeowners insurance coverage before signing off at closing.

In reality, this is a sound business tactic, as the lender will want to protect its investment, which is the property, not the person it’s lending to (harsh, we know). Let’s say the home is damaged in a windstorm or burns to the ground. Insurance will cover the cost, after a deductible, without burdening the homeowner. The homeowner can then continue to pay their mortgage on time, much to the delight of the lender.

Again, if you live in an area prone to certain disasters like floods or earthquakes, your lender may require additional coverage. Check with your lender on what’s necessary before signing.

If a person’s first home happens to be a condo or co-op, the board may also require specific coverage, thanks to a shared responsibility for the entire complex.

Recommended: House or Condo: Which Is Right For You? Take the Quiz

Can You Forgo Homeowners Insurance?

Technically, there are no laws requiring a person to obtain homeowners insurance, but it’s a rule put in place by many lenders.

If you’re paying cash for a new home, you can forgo purchasing homeowners insurance, though that may be a risky proposition.

Think you can somehow snake the system? Think again. If a lender doesn’t feel that the homebuyer is working hard or fast enough to find homeowners insurance before closing, the lender may go ahead and purchase insurance in that person’s name with what’s called “lender-placed insurance.”

This isn’t as cool as it sounds. Not only will it increase the mortgage payment, lender-placed insurance is typically more expensive than traditional homeowners insurance. And it may not even provide all the protection a homeowner needs or wants.

To give yourself enough time to find the right policy for you, aim to start shopping around a good 30 days before closing.

How Much Coverage a Person Needs

How much homeowners insurance a new homeowner needs will depend on the value of their home and the possessions in it. As a first step, would-be homeowners can ask their agent for a recommended amount of coverage.

After determining that number, it’s also a good idea to take stock of belongings and see if any items may require additional coverage (think expensive antiques, paintings, or other irreplaceable items). It could also be smart to photograph and digitally catalog major items in a home for proof needed on any claims.

Replacement Cost vs. Actual Cash Value

When shopping for homeowners insurance, there’s replacement cost coverage and actual cash value coverage.

Replacement cost coverage pays the amount needed to replace items with the same or similar item, while actual cash value coverage only covers the current, depreciated value of a home or possessions.

This means that if you have actual cash value coverage and disaster hits, you’ll only be able to get enough cash for the depreciated value of the home and items, not the cost of what it may take to replace them.

Most standard homeowners insurance policies cover the replacement cost of a physical home and the actual cash value of the insured’s personal property, but some policies and endorsements also cover the replacement cost of personal property.

The upshot: It’s best to go for replacement cost coverage whenever possible.

Recommended: Hazard Insurance vs. Homeowners Insurance

The Takeaway

Is homeowners insurance required to buy a home? If you’re taking out a mortgage, that’s almost always a “yes.” It’s worth looking at your options — and understanding what will and will not be covered — so you can feel at ease in your new home for years to come. And keep in mind that shopping for homeowners insurance often requires considering several options, from the amount of coverage to the kind of policy to the cost of the premium.

If you’re a new homebuyer, SoFi Protect can help you look into your insurance options. SoFi and Lemonade offer homeowners insurance that requires no brokers and no paperwork. Secure the coverage that works best for you and your home.

Auto Insurance: Must have a valid driver’s license. Not available in all states.
Home and Renters Insurance: Insurance not available in all states.
Experian is a registered trademark of Experian.
SoFi Insurance Agency, LLC. (“”SoFi””) is compensated by Experian for each customer who purchases a policy through the SoFi-Experian partnership.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOPRO-Q225-029

Most states require licensed drivers to carry auto liability insurance — and for good reason. Liability coverage helps pay for the damages to other people involved in a car accident if it’s determined you were responsible.

State law may leave it up to the individual to decide if they want to carry the kind of insurance that will help pay to repair their own wrecked car or injured body. But in most cases, drivers won’t have an option when it comes to liability coverage.

Since your automobile could cause physical or material harm to others, you’ll generally be expected to carry enough insurance to cover those potential costs or, in some states, provide proof of financial responsibility.

What Is Liability Car Insurance?

If you’re found at fault — or “liable” — for an accident, liability insurance helps pay the other driver’s expenses.

There are several other types of car insurance coverage available to drivers, so it’s easy to get them confused. Collision coverage, for example, pays to repair damage to your own car after an accident. And comprehensive coverage helps pay for damage to your car that’s caused by other factors, such as hail, a fire, or theft.

Auto liability insurance is all about the other guy. It’s not there to cover your costs or the costs of anyone who was riding in your car when the accident occurred.

Recommended: How Much Auto Insurance Do I Really Need?

What Does Liability Insurance Cover?

In general, there are two types of liability insurance offered on most standard policies:

Bodily Injury

This type of liability coverage protects the at-fault driver by paying for the other person’s emergency and continuing medical expenses related to the accident. It also might cover loss of income or funeral costs, or legal fees if there’s a lawsuit.

Property Damage

Property damage liability coverage helps pay for repairs to the other person’s car or other property (their home, a business, a fence, a bicycle, etc.) when the policyholder causes an accident.

Are There Limits on What an Insurer Will Pay?

Yes. The amount an insurer will pay for a claim depends on the coverage limits a policyholder chooses. Note that the amount of coverage you’re required to carry varies from state to state, and you might choose to purchase a higher level of coverage than your state mandates.

Coverage caps are usually broken down into three categories:

Bodily Injury Liability Limit Per Person

This is the maximum amount an insurer will pay out for each individual who is injured in a car accident (other than the at-fault driver who is the policyholder).

Bodily Injury Liability Limit Per Accident

This is the maximum amount an insurer will pay overall for medical expenses if multiple people are hurt in an accident. Again, it does not include medical costs for the at-fault policyholder.

Property Damage Liability Limit

This is the maximum amount an insurer will pay to repair any damage a policyholder caused to another person’s property. Any amount over that limit will likely be the responsibility of the policyholder.

How Much Liability Insurance Should a Driver Have?

You cannot buy less than the minimum amount of liability insurance your state legally requires. But some states require significantly less coverage than others.

For example, the minimum liability insurance requirements in California are $30,000 for injury/death to one person, $60,000 for injury/death to more than one person, and $15,000 for damage to property.

But the minimum requirements in Maine are more than twice those amounts: $50,000 per person for bodily injury, $100,000 per accident for bodily injury, and $25,000 for property damage. (A combined single limit of $125,000 will also satisfy the minimum limit requirement in Maine.)

General recommendations from the insurance industry suggest consumers purchase at least $100,000 of bodily injury liability per person and $300,000 per accident.

Keep in mind that when you’re shopping, you may not be able to choose standalone limits for each category of liability coverage. Most insurers set their coverage limits as part of a package, and you may have to make your purchase from those pre-established plans.

For example, a 25/50/10 policy would set the bodily injury limit per person at $25,000, the bodily injury limit per accident at $50,000, and the property damage limit at $10,000. Any costs that exceed those set amounts would be the responsibility of the policyholder.

Some people also consider purchasing an “umbrella” policy that would cover any excess costs if liability limits are exhausted. This type of policy can help protect you from large liability claims or judgments if you’re sued. And your umbrella policy may cover you as well as other members of your family or household.

According to the Insurance Information Institute, the average cost of a claim after a private passenger car accident in 2022 was $26,501 for bodily injury and $6,551 in property damage. But a claim could go much higher, if there are multiple victims, for example, or if there are serious injuries or someone is killed.

Recommended: How to Lower Car Insurance

What’s the Difference Between Full Coverage and Liability Only?

An auto insurance policy that includes liability, collision, and comprehensive coverage is sometimes called “full coverage,” because it covers both your costs and the costs of others involved in an accident.

Most states require liability coverage. But if your car is paid off, your state may not require collision (which helps to repair or replace a car that’s damaged in an accident) or comprehensive (which pays if the car is stolen or damaged by fire, vandalism or some other non-collision scenario).

And if your car isn’t worth much, you might decide to forgo one or both when purchasing car insurance. If your car is financed, however, the lender could require full coverage even if the state doesn’t.

Some states also may require other types of coverage:

•   Uninsured motorist and underinsured motorist coverage can help cover your medical expenses if you’re in an accident with a driver who has little or no insurance.

•   Uninsured motorist property damage coverage can help repair damage to your car if you are hit by an uninsured motorist.

•   Personal Injury Protection (PIP) and/or Medical Payments (MedPay) can offer protection if you or your passengers are hurt or killed in an accident.

Do You Need Liability Coverage If You Live in a No-Fault State?

A dozen states have instituted “no-fault” laws for drivers. Coverage rules and limits may vary from state to state, so you should be clear on the specifics of what your state requires.

Generally, when you live in a no-fault state and you’re in a car accident, everyone involved files a bodily injury claim with their own insurance company, regardless of who was at fault. Still, every no-fault state requires some level of liability coverage.

Drivers in no-fault states also typically must have Personal Injury Protection (PIP) insurance included in their car insurance policy to cover their own potential medical bills and expenses. PIP plans cover medical expenses for the car’s driver and passengers, which can include hospital bills, medication, rehabilitation, and other injury-related costs.

PIP insurance doesn’t replace bodily liability coverage in every state, and it doesn’t cover property damages. Your insurance company pays for repairs to your car if you have collision coverage. Or you may have to make a property damage claim against the at-fault driver’s insurance.

What If You Have an Accident in Another State?

Ready for a road trip? If you have an accident, your liability insurance may increase to match the minimum limits in whatever state you’re in, and in Canada. But you may want to check with your insurance company if you like to travel, especially if you have a bare-bones policy.

What’s Covered If Someone Else Is Driving Your Car?

The short answer is that the auto insurance covering the vehicle, not the person driving, is usually considered the primary insurance. So if you let someone else drive your car and that person causes an accident, your insurance company probably would be responsible for paying the claim.

Your liability coverage wouldn’t pay the medical bills of the person driving your car or the repairs to your car, although those costs may be covered by other parts of your policy. But it likely would be your liability insurance that pays for the driver of the other car’s medical bills and property damage.

Again, state laws may affect who is responsible in this situation, so it can help to know the rules before letting someone else drive your car.

How Much Does Liability Coverage Cost?

The price you’ll pay for liability coverage could be based on several factors, including how much you buy and where you live. Your age may also play a factor — younger drivers may pay more for coverage, for instance. You can do a little online shopping to search the best rates for your area.

But a better question might be, “How much will it cost to bump up my liability insurance beyond the state-mandated minimums?” Getting twice as much coverage won’t necessarily cost twice as much. If the price fits your budget, you may want to consider carrying more coverage than the law requires.

Upping coverage might increase your comfort level, considering the expenses that might be involved in a major accident, even if you have insurance. The extra coverage may cost more, but if you’re a safe driver you may qualify for better rates. You can research car insurance online and compare quotes to find one that fits your budget.

The extra coverage may cost more, but if you’re a safe driver you may qualify for better rates.

The Takeaway

If you’re held responsible for a car accident, liability insurance will help pay the expenses of the others involved. Most states mandate this coverage, including “no-fault” states. But the amount of coverage you must carry may vary from state to state, so when you’re researching automobile insurance, it can be useful to know your state’s rules. Shopping around for insurance in your area can help you figure out how much coverage you really need and what your premium might be.

When you’re ready to shop for auto insurance, SoFi can help. Our online auto insurance comparison tool lets you see quotes from a network of top insurance providers within minutes, saving you time and hassle.

Auto Insurance: Must have a valid driver’s license. Not available in all states.
Home and Renters Insurance: Insurance not available in all states.
Experian is a registered trademark of Experian.
SoFi Insurance Agency, LLC. (“”SoFi””) is compensated by Experian for each customer who purchases a policy through the SoFi-Experian partnership.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOPRO-Q225-028

Most businesses report information to the credit bureaus every 30 to 45 days. Each on-time payment you make may barely affect your score, while a missed payment can have a significant effect.

But how often does your credit score update? Let’s find that answer, and learn how to keep an eye on your credit history and credit score.

When Do Credit Reports Update?

Whenever consumers take some sort of action relating to their credit, their score — usually a number between 300 and 850 — will fluctuate.

For instance, if they apply for a loan or miss a credit card payment, their score could change.

There is no set date for a credit score update because a lender or creditor may send information to the three main credit bureaus at different times: Experian one day, Equifax five days after that, and TransUnion a week later.
An update, though, will occur at least every 45 days.

Rather than constantly checking for updates, you might want to focus on long-term goals that can help you build credit, like paying off debt, always sending payments on time, and ensuring that your scores are going in an upward direction.

Need help managing your finances? With an online budget planner, you can set budgets, organize spending, and spot upcoming bills.

Recommended: Which Credit Bureau Is Used Most?

What Is a Good Credit Score?

Lenders most often use FICO® Score, but the credit bureaus introduced the VantageScore® in 2006 to provide a score that was more consistent among the three credit agencies.

This is how the FICO Score and the latest VantageScore models break down:

People with high scores typically have access to higher lines of credit and lower interest rates. Those with low credit scores may not be approved for certain credit cards and loans. And if approved for, say, a mortgage, they will usually pay a much higher mortgage interest rate.

How to Check a Credit Report

Under federal law, consumers are entitled to one free copy of their credit report every week from each of the main credit reporting agencies: TransUnion, Experian, and Equifax.

AnnualCreditReport.com is the only authorized website for free credit reports, according to the Federal Trade Commission.
Consumers can also call 1-877-322-8228 and provide their name, address, Social Security number, and date of birth to verify their identity.

If you want to check your credit history more frequently, you can ask one or all three credit reporting bureaus for another copy. They may charge you a small fee for the service.

Why check your credit report periodically? Mainly:

•   To make sure the information is accurate and up to date before you apply for a home or car loan, buy insurance, or apply for a job.

•   To help guard against identity theft.

Recommended: How to Read A Credit Report

How to Check a Credit Score

The free credit reports do not include your credit score — or more accurately, scores. Your credit score from each of the credit bureaus will vary based on the information each has. Lenders also use slightly different credit scores for different kinds of loans.

How to get your credit scores then? Here are a few ways:

•   Buy a score directly from the credit reporting companies or from MyFICO.com.

•   Look at a loan statement or a credit card statement. Some financial companies provide credit scores for customers as a perk.

•   Use a credit score checker. Some services give consumers access to their credit scores but charge for premium services like checking a score daily. Other sites may require that you sign up for a credit monitoring service with a monthly subscription fee in order to get your “free” score.

•   Sign up for a money tracker app like the one from SoFi. It provides free weekly updates on your credit score and tracks all of your money in one place.

When signing up for credit score checking websites, it’s important for consumers to look at the terms of service and ensure they’re not being charged for premium services they do not want.

Also, it’s best to avoid an “educational” credit score vs. a score that a lender would use. For some, there will be a meaningful difference, according to the Consumer Financial Protection Bureau.

What Makes Up a Credit Score?

Learning about what factors make up a credit score can help consumers raise their scores. Main factors that contribute to the score include:

Payment History

Payment history is the most important factor when calculating a score, so it’s critical to always repay debts on time.

Credit Utilization

The credit utilization ratio is the amount that is owed in relation to how much credit a person has overall. Keeping your credit utilization ratio below 30% is commonly recommended.

Length of Credit History

For the length of the credit history, consumers can increase their score by not closing cards. The longer someone’s credit history is, the better.

New Credit

Applying for a new credit card and loan that requires a hard inquiry could ding your credit score. But rest assured, the drop is temporary. It’s multiple hard inquiries on a credit report in a short period that can cause damage. Then again, if someone is shopping for a mortgage or auto loan, both FICO and VantageScore account for multiple hard inquiries in a grace period of 14 to 45 days.

Credit Mix

Credit mix refers to credit cards, student loans, auto loans, personal loans, and mortgages. By having a mix, consumers show that they can manage all kinds of debt.

Why Credit Scores Matter

Having a high credit score can help consumers in a number of scenarios. For starters, it can help consumers qualify for better interest rates, which in turn can lower the cost of borrowing.

Consumers with a strong credit score can often reach their financial goals quicker and utilize better products. For example, they may get approved for a credit card that offers perks like bonus travel rewards or cash-back rewards. They might also be able to use a card with a 0% introductory APR or 0% balance transfer rate for a certain period.

But the benefits extend beyond borrowing. People with a high score may be able to rent a better apartment or home since landlords often check prospective tenants’ credit. They may also gain access to better car insurance rates and be able to avoid paying deposits to utility companies and cellphone providers.

The Takeaway

How often does your credit score update? All the time, really, but once every 30 to 45 days is a good barometer. While it can be tempting to constantly check your score — especially if you’re getting ready to make a major purchase — you may instead want to focus on strategies that build up your credit. Some steps include paying bills on time, paying down revolving debt, and keeping older accounts open.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

About the author

Kylie Ora Lobell

Kylie Ora Lobell is a personal finance writer who covers topics such as credit cards, loans, investing, and budgeting. She has worked for major brands such as Mastercard and Visa, and her work has been featured by MoneyGeek, Slickdeals, TaxAct, and LegalZoom. Read full bio.

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

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