After Tuesday’s Credit Card Reform post, I received a number of emails asking how to get one’s credit score for free. I had written about this over a year ago, telling my readers how a WAMU (Washington Mutual) credit card offered free access to your credit score as a benefit. Sure enough, WAMU was taken over by Chase Bank, and that little perk was canceled. Now, another company offering free access to one’s score is Credit Karma. This is currently the only free credit score (with no 30 day trial to some monitoring service) that I’m aware of. A credit score doesn’t tell the whole story, but as in can have an impact on the rate you’ll pay for a mortgage, car loan, or credit card, it’s a good idea to know your score and maybe heko inch it up a bit before applying for new credit.
This would also be a good time to recap how your credit score is calculated:
By the way, the above is from a PBS special, “Secret History of the Credit Card.”
FICO formulas are still a bit of a secret, but the above is a good start. As I’ve read more about each of these criteria, I understand that ‘amounts owed’ are a ‘percent available credit used’ more than total dollars. So accepting a new card and instantly using the entire line may have a bit of an impact, but this is where unused credit on other cards actually helps bring down the total percent used. Of course, applying for too many cards in a short timespan also will impact your score. Canceling cards can hurt you in two ways, raising the ‘percent credit used’, and reducing average age of accounts, so you are correct, these are concerns.
I’d also suggest an article “Five Mistakes That Hurt Your Credit Score” by Jeffrey Strain of TheStreet.com which adds to the thoughts I presented here.
Last, you can go to annualcreditreport.com and request to view your credit report from each of the three nationwide consumer credit reporting companies: Equifax, Experian and TransUnion. Since each one permits you you view your report annually, you are able to view a different one every four months. I’ve not seen the value in paying for credit protection since your credit cards’ liability limits you to $50 so long as you repost a card stolen soon after you are aware it’s missing. Keep in mind – Credit Report is a list of all your current debts, including open accounts along with their available credit as well as recently closed accounts, Credit Score is one number ranging from 300-850. Neither shows your income but only reflects how you’ve handled the credit you have. The credit report will show late payments and that will impact your credit score. I believe the changes in our banks’ behavior will impact all of us, and result in undeserved lower scores.