Points & Miles 101: Getting Your Credit Score for FREE!

As I alluded to in my last post in Points & Miles 101, in addition to getting your free credit report, there are a few ways to get your credit score for free as well!

There are several companies out there they will provide you with an accurate representation of your credit score for free with the two most popular companies being Credit Karma and Credit Sesame. Now I want to be very upfront, the scores provided are not your FICO score but instead a CLOSE estimate to what your actual FICO score is. Now I’m sure their names sound ‘gimmicky’ to you but as a user of both services (in addition to thousands of other), I can personally vouch these companies are legitimate and 100% FREE.

Each company has developed algorithms that closely mimic the calculation FICO uses to determine your credit score. By inputting your social security number, you agree to give them access to your credit history which then allows them to run their algorithms to determine your credit score.

I’m sure I just set off a big red flag in your head since you have to provide your social security number to a company you’ll probably never heard of before this post. However, I’m here to assure you these sites are VERY secure with high level encryption software. If you think about it, if you’re comfortable giving your social security number while applying for a credit card on a bank’s website why would you not be comfortable doing this? You can read more about their security here.

Ralph's Credit Score

Ralph’s Credit Score

Additionally, because I know this question will come up, there is absolutely NO impact to your credit score for doing this. If you were to check your FICO score, there is a very small impact to your score because an inquiry was made on your account. However, since the score provided is not your FICO score, you don’t have to worry about this.

I think every person should review their credit reports and know their credit score – this is financially responsible behavior.  If your credit report is wrong, fix it. If your credit score is under 700, start taking steps to improve it. Even if you have no interest in doing these items related to points and miles, you should do it to remain financially healthy. Plain and simple, this is just good personal finance advice.

Signup Links

Credit Karma

Credit Sesame

*Please note if enough people signup for Credit Sesame via the link above, I will earn a small commission. As a user of this product, I would strongly recommend it whether I was paid a commission or not. I do not earn a commission on Credit Karma.

Points & Miles 101: Getting your FREE Credit Report

I like to think the following is not only good advice for those about to get into points and miles but also solid, sound personal finance advice that everyone should be aware of.

In the United States, there are 3 major credit bureaus that report an individual’s FICO score. The three credit bureaus are Equifax, Transunion and Experian. Each of them uses its own database of information to determine an individual’s FICO score. The FICO score is the most commonly referred to metric for measuring a person’s credit score and it ranges from 300 to 850. Interestingly enough, the three bureaus generally have slightly different FICO scores for an individual so your credit score will vary based on what credit bureau it is obtained from.

The biggest factors that contribute towards your credit score is your payment history (35%) and current outstanding balances (30%). The FICO website does an excellent job of breaking down the formula to determine your credit score in more detail. In short however, someone who makes on-time payments, has not filed for a bankruptcy or does not have a massive amount of debt outstanding in relation to their total credit available (the credit utilization ratio), will generally have a high credit score.

While the FICO score ranges from 300 to 850, it is foolhardy to try and obtain a perfect credit score of 850. While it is basically unattainable to begin with, there is absolutely no need for a credit score that high. The range of excellent credit is generally regarded to be from 720 to 850. If you fall within that range, then it makes no difference if your credit score is 750 or 830 as you would qualify for the best interest rate on a loan.

Did you know that by federal law every American is entitled to a copy of their credit report from each of the 3 credit bureaus listed above? Every 12 months, you can obtain your credit report from www.annualcreditreport.com, which is run by the federal government.  These reports will show your complete credit history and show your current balances as the credit bureaus know them. Please do note though, there is a lag of  information so if you recently paid off a credit card or loan, it might not yet be reflected on your report.

FTC_Annual_Credit_Report1

The tieback of this to points and miles is that I strongly recommend an individual obtain copies of their credit reports before applying for a series of credit cards. You will want to get a sense of what your credit report entails and to check for any misstatements. On my credit report, I noticed a Discover credit card which was wrong as I have never had any type of Discover card. While it was slightly annoying to call them and have them investigate it, they did remove that account from my credit report after their investigation a few days later. You could easily imagine there might be wrong information on your credit report which could weigh down your credit score considerably. Don’t let that be you!

The most common complaint I’ve heard about these reports is they do not include your credit score and that’s absolutely correct. The law states only the report, not the score, must be made available to consumers once a year. The credit bureaus will happily sell you your credit score for a nice fee but stay tuned for the next post in Points & Miles 101, as I talk about a few tools that will show you your credit score for free!