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!