I have been asked, “How can I find out my credit score without signing up for a monthly service?” My reply is – that’s the wrong question. Why?
There are many different scoring systems. The best, in my opinion, is the FICO score. Fair Isaacs and Company (FICO) has proprietary software which checks multiple credit sources and comes up with a score. The three credit bureaus have their own scoring systems. Plus there are others like Vantage Score. One mortgage company pays for scores from the three credit bureaus and then uses the middle score.
Your credit score is a snapshot on that one day only. It changes all the time.
Knowing your score won’t do you any good unless you take action to improve your score.
That’s the question to ask – “How do I improve my credit score?”
To do this you must know the components of a credit score:
35% depends on whether you pay your bills on time. Easy to improve – pay all your bills on time. If you happen to miss one by a couple of days, call them up and make sure they know the money is coming. Ask them not to hurt your credit.
30% depends on your debt levels. How much debt you have vs. your available credit. If your credit card has a limit of $2000 and you have a $20 purchase, you will score high. If you have six credit cards, all maxed out, your score will suffer.
Remarkably, two-thirds of your score is just paying your bills on time and keeping your debt level low. Concentrate on these two areas which you absolutely control. The remaining components – credit history, new credit applications, and credit mix – have much less effect on your score.
That said, I did find a place where one can get a free credit score: eloan works with a website called creditkarma.com which provides a free score based, I believe, on the Transunion credit bureau. You must be careful, however, when applying for a credit score – they all must have your Social Security number, and it is not a good idea to give it out without knowing and trusting the site. Credit Karma provided me with a free score with helpful information on how my score compares with others. They gave me letter grades in several credit categories – useful because I want to improve my score. Be careful, the site will try to sell you stuff.
You might be able to obtain your score at no cost after you have applied for a loan. Just ask the person who viewed your credit report.
Yes, you should know your credit score, but not just to see the number; your goal should be to improve how you use credit.