How to Get Your Credit Score (without getting ripped off)

Here's How to Get Your Free Credit Score

Your credit score is a number ranging from 300-850, with lower numbers representing a "poor credit risk" and higher ones indicating an "excellent credit risk." Your credit score can make a difference of several hundred dollars a month in your mortgage, loan or car payment. I was reminded of that recently when refinancing my mortgage. You may be unable to get credit at all if your credit score is terrible. But do you know what your credit score is right now?

Most people don't know their credit scores. They may know what it was the last time they applied for a loan, but it most likely has changed since then. Perhaps your own credit activity (newly opened or closed accounts, high balances, payments, missed payments, or identity theft) triggered a change in your credit score. Identity theft is a growing problem, and ID thieves may be ruining your credit score without your knowledge. (See my related article Have You Made These Identity Theft Mistakes?)

It's a good idea to monitor your credit score regularly to be on the lookout for changes that require investigation. Just checking your score will not affect your rating, but it can be costly to monitor your credit score. Fortunately, if you know where to look, you can find out your credit score for free.

Free Credit Score... With Strings Attached

Yes, there lots of places online that offer a "free credit score" with strings attached. You'll have to fork over a credit card number for a trial subscription to an ongoing credit monitoring service. Some don’t even throw you the free trial bone. MyFICO.com will tell you your credit scores as reported by the three major credit reporting agencies – Equifax, Experian, and Transunion – if you sign up for a credit monitoring service that costs from $20 to $40 a month. (myFICO is the consumer division of FICO, the company that invented the FICO credit score.)

Wait, credit scores, plural? Yes, consumers have at least THREE credit scores -- one from each of the major credit reporting agencies (Equifax, Experian, and Transunion). These "FICO scores" are the numbers that most lenders use when deciding whether to offer a loan. Each of the major credit bureaus use a proprietary scoring method developed and licensed by the Fair Isaac Corporation to calculate your FICO credit score. Usually they're all pretty close. But incorrect, inconsistent, or missing information in your credit files can cause them to differ.

Firms that offer credit monitoring services are required by law to let you cancel a subscription without penalty during a trial period, which can range from only 7 to a more reasonable 30 days. But many people forget to cancel and get locked into contracts that can cost from $10 a month to over $480 a year. If you are diligent and highly organized, this might be a good way to get your credit score for free. But if you flirt with the bait regularly, the odds are that one day you will get hooked too.

If you're merely curious and you want just an estimate of your FICO credit score, MyFICO offers a free Credit Score Estimator. The estimator asks you ten questions about your finances and provides you with a range in which they think your score will fall. The nice thing about this tool is that no credit card is required, and you don't have to cough up any personally identifying information. The downside is that it could be way off, and banks will only use the actual FICO score when making lending decisions. Save yourself some time and spin the wheel on this 3-digit random number generator instead.

Many banks and major retailers offer ongoing credit score reporting and monitoring as part of their services. Credit unions and credit card providers may have similar perks. If you are shopping for a new bank or credit card, try to negotiate free credit score monitoring as part of any package you hope to put together.

But don't kid yourself. Whoever gives you a credit score is paying something to the Big Three for it. You're probably paying for it somewhere among all the other charges you get from any service provider.

A Truly FREE Credit Score?

There are a few exceptions that I have found: Credit Karma is advertiser-supported, so you will be presented with offers from credit card companies and other lenders after you give your personal information, in exchange for your Equifax and TransUnion credit scores. But you won't have to cough up a credit card number or commit to a subscription service. You will have to provide your birthdate and the last 4 digits of your social security number, to verify your identity. Credit Karma has an excellent rating with the BBB, and they're been around for several years, so I feel comfortable recommending this service.

Credit Karma shows your credit scores calculated using VantageScore 3.0. It’s free and there’s no impact to your credit. VantageScore was created by Equifax, Experian and TransUnion and is supposed to provide better scoring consistency across the three bureaus. VantageScore take into account up to 24 months of your payment history, how long you’ve had credit, the types of credit you have (credit cards, auto loans, student loans, mortgages, etc.), your credit limits and how much of those limits you’re using.

NerdWallet also provides the TransUnion VantageScore for free. Their credit score simulator helps you see how certain actions can mean big point changes in your credit score. NerdWallet recommends that you use less than 30% of your credit limit on any card. The best scores go to people using 10% or less of their credit limit. You may bump up your credit score by raising the limits on your cards, or by extending your streak of on-time payments.

Another free option is Credit Sesame, which provides your TransUnion credit score and an overview of your credit and debt situation. Credit Sesame uses a patented "bank-level analytics engine", which continually analyzes the lending markets, in search of ways for you to save money on loans, credit card debts and your home mortgage. No credit card is required to use the Credit Sesame service.

Chase Bank has a free service called Credit Journey that lets you check your score any time (even if you're not a Chase customer). They update your score every week and tell you what’s changed.

Your bank or credit union may offer to provide your credit score. Log in to your online banking and see if that option is present.

What Goes Into a Credit Score?

CreditKarma, NerdWallet and CreditSesame all use VantageScore 3.0 to calculate your credit score. However, most banks and other lenders make their decisions using the FICO model. But chances are good that if you have a good VantageScore, you will also have a good FICO score. That’s because both of them use similar methodologies for calculating your credit score. Factors that are important in determining (or raising) your credit score include the following:

• On-time Payment History: Missed payments or accounts sent to collections will bring down your score.
• Credit Balances: Lenders prefer a low ratio of debt to available credit
• Recent Applications: If you've applied for a lot of credit recently, that’s a potential red flag.
• Credit History: The longer your credit history, the better for your credit score.
• Credit Mix: Lenders like to see that you are managing a wide range of credit products, such as car loans, credit cards, student loans, mortgage, etc.

Got something to say about getting your free credit score? Do you know of another option to get a credit score for free? Post your comment or question below...