I regularly monitor my credit to make sure there are no red
flags. Before I apply for any new
credit, the first thing I do is make sure I have a good credit score. I like to make sure my score is at least
over 740 before applying for a new
credit card bonus offer.
Your credit score
Your credit score is calculated based on these 5 factors:
35%: Payment History (how timely and consistent your payments are)
30%: Credit Utilization (debt-to-credit ratio)
15%: Length of Credit History (when did you get your first credit
card?)
10%: Types of credit used (mix of credit and loans, revolving,
consumer finance, mortgage)
10%: Recent searches for credit (hard inquiries and new
accounts)
There are 3 major credit reporting agencies: Experian, Transunion,
and Equifax. Each credit agency uses its own formula
to calculate your score. While you
can directly buy your FICO score online at myfico.com, many other online sites offer credit scores
as well. Because different
companies use different credit criteria, your credit scores will likely vary
between different sources.
For most people, I do not recommend paying for your credit
score. There are plenty of good
online websites that offer truly free
credit scores and reports. These sites do NOT require your credit card
information and the credit scores provided are really free, not some 7-day
trial where they bill your credit card afterwards.
Sites offering free credit scores that I recommend
Credit Karma gives you a simulated Transunion
score and VantageScore. You can
update your credit score once a week.
CreditSesame gives you a
simulated Experian score. You can
update your credit score once a month.
Quizzle gives you a simulated Equifax and
VantageScore. You can update your
free credit score and report once every six months
Credit.com gives you a simulated Experian score that you can
update once a month.
Some credit card
companies provide free credit scores
If you are a Barclaycard credit card holder, you can get a free
FICO score. My favorite
Barclaycard credit card is the ArrivalPlus MasterCard.
If you are an American Express credit card holder, you can get
your free simulated Experian credit score and report once a year. My favorite AMEX card is the Starwood Preferred Guest credit card.
Discover credit cards also offer free credit scores. I won’t comment here because we don’t
own any Discover cards.
After checking my various credit scores, I had the confidence I
needed to apply for another credit card!