It’s very important for all consumers to check their credit scores periodically. This is especially true if you are getting started in the world of points and miles. Luckily access to your free credit score has never been easier. Let me tell you exactly what you need to know.
First off do you know your credit score? The National Foundation for Credit Counseling’s 2014 Financial Literacy Survey revealed that 65% of Americans had not reviewed their credit report in the past 12 months. By law you are entitled to a free annual copy of your credit report from all three credit bureaus’ (Experian, Equifax, and Transunion). The US Government recommends using AnnualCreditReport.com, which works well for detailing your credit history, but it doesn’t provide a credit score. Don’t worry we will cover this topic below.
Reports vs. Scores
Credit Report: Typically no numerical score is provided but it does give detailed information on your credit balances, bill payment history, credit inquiries, as well as listings of bankruptcies, foreclosures, or tax liens.
Credit Score: Numerical reflection of the information in a person’s credit report. This is used by banks to evaluate risk and plays a primary factor in determining whether or not a person will be extended credit. The FICO score is the industry standard score used by almost all financial institutions.
Hard vs. Soft Credit Pull
When you apply for a credit card, mortgage, or auto loan the lender will do a “hard” pull, which results in an inquiry listed on your credit report. When you use credit monitoring services such as Credit Karma it results in a “soft” pull, which has no impact on your credit score and is not listed as an inquiry on your credit report.
Free Online Services
All of these services listed below provide free credit scores and do not require a credit card to sign up. The service providers have their own proprietary credit score model so it may differ from the industry standard FICO score, but it is typically very close.
Credit Karma – Our personal favorite. Provides weekly detailed scores from Transunion and Equifax. If you use their phone app they will push any credit score changes to your phone. Everyone should try out this service.
Credit Sesame – Scores updates every month from Transunion.
Mint.com – Score updates every 3 months from Equifax.
Quizzle – Score updates every 6 months. Quizzle gives you a free copy of your VantageScore credit score and Equifax credit report.
Many banks have finally realized that consumers want better access to their credit scores. The following institutions will be providing free credit scores to customers by 2016:
- Bank of America
- Citi branded credit cards
- Chase Slate credit cards
- First Bankcard
- Pentagon Federal Credit Union
- Citi branded credit cards
- Chase Slate cards
Thrifty Tip #1: Review your free credit report from all three credit bureaus’ @ AnnualCreditReport.com.
Thrifty Tip #2: Utilize one of the many free services to periodically review your credit score. I highly recommend Credit Karma.
You should now have a better understanding of how credit reporting works and can easily monitor changes to your credit score. Any large unexplained changes to your score should be investigated immediately, as you could have been the victim of identity theft. Many times there is a good explanation for changes in your score so utilize the monitoring products above to do your own initial investigating. I also highly recommend following credit industry expert John Ulzheimer on Twitter. He passes along very timely and important tips for better understanding the complex world of credit reporting.