The Ultimate Guide to Free Credit Scores

Your Guide To Free Credit Scores

With all the freebies available on the internet these days, it seems very primitive, almost barbaric, to pay to view your own credit score, doesn’t it? Fortunately for us, there are many FREE ways to obtain your credit score. Some are premium “free trial” services with extensive credit monitoring and identity theft protection features, others are more simple ad-supported services which are 100% free all the time, but they too have their own pros and cons.

This guide will help lead you in the right direction – but if you don’t want to read through “the basics”, you can jump straight to the reviews section and get going.

Let’s start with the basics…

What is a credit score, and why is it important?

Your credit score is a 3 digit number that represents your credit worthiness, based on the information contained within your credit report. That little 3 digit number is an important one to know. It’s what lenders look at to determine your eligibility – and is usually the deciding factor on the loan terms and interest rates you qualify for. It can also dictate whether or not you are approved for the credit or loan you are seeking.

Basically, when your credit score is pulled, the credit scoring system scans the contents of your credit report, and uses a complex mathematical algorithm to give your credit a 3 digit “score”, based on a preset scale. For example, 300-850 – of course the higher you are on that scale, the better.

How is a credit score calculated?

What kind of information is used to determine a credit score? Basically everything in your credit report. But some items carry more weight in determining your score than others. Here’s a brief overview of how your score is calculated and what affects it most, this is according to the king of credit scoring, Fair Isaac Corp. –

  1. Payment History (35% of your score) – This includes whether you pay your bills on time, if you’ve had late payments, collections, bankruptcies etc.
  2. Amounts Owed (30%) – This includes how much you owe on installment loans like car loans and mortgages, as well as how much of your available credit you utilize on revolving credit accounts, such as credit cards.
  3. Length of Credit History (15%) – How long ago you first established credit, especially if you’ve had certain accounts for a long time.
  4. Types of Credit In Use (10%) – A good mix of credit accounts such as credit cards, car loans, and mortgages usually show responsible credit management.
  5. New Accounts (10%) – Lots of new accounts and new credit inquiries is generally a red flag for lenders. However, if they see a good long history of responsible credit management, this usually has only a minimal affect.

How often does a credit score change?

If you checked your score today, it’s likely to be different than it was a month ago. It’s like a snapshot of your credit on a given day. This number doesn’t necessarily change daily, but it will definitely change monthly, maybe even weekly, as your creditors report your new balances, payment history, etc. to the credit bureaus.

Your credit score can change as often as your credit report changes, which depending on your specific situation, can be fairly frequently. That’s why it’s important to check it regularly.

Why do I need to monitor my credit score?

Something seemingly as small as a 20 point difference in your credit score can cost you thousands of dollars over the life of a loan, if it meant that you weren’t eligible for the best interest rates available. That’s one of the biggest reasons it’s important to check and monitor your credit score on a regular basis, especially if you plan on applying for credit or loans in the near future. You need to know what your score is and if there’s anything you can do to help improve it.

It’s also really useful to be able to see how your score changes over time, and how the different actions you take, affect your score.

For example, as mentioned before, if your score is just 20 points below a certain threshold to obtain better loans terms and/or interest rates, there may be steps you can take to help improve your score before you apply – doing so could possibly save you thousands in interest! That is one of the goals that can be achieved by utilizing the credit monitoring services we talk about in this guide.

How It Works – Free Credit Scores

In order to get a free credit score online, you will need to sign up for some sort of credit monitoring service first. Some are completely free (ad-supported services), others aren’t completely free, but have free trials (premium services) – but they all provide your free credit score upon sign-up. How they work depends on which type of service you decide to use.

What is a credit monitoring service?

Credit monitoring is the act of keeping a close eye on your credit report, any changes that may occur to your report – such as new accounts, credit inquiries, payment history on your accounts… anything important that is contained within your credit report.

Credit monitoring services provide an easy, automated way to monitor your credit reports. This automatic monitoring is typically done on a daily basis, so you can be alerted right away of any key changes to your credit files. Most of the top services out there will also monitor your credit score(s).

Types of credit monitoring services

As of right now there are two main types of services which will provide you with a free credit score. For the purpose of this guide, I will refer to them as “Ad-Supported” and “Premium” services.

To make it easier to understand, try to look at it like a paid cable channel such as HBO (premium) vs. a free local network like NBC (ad-supported). Both have great programming, and come with their own advantages and disadvantages. This is very similar to the credit monitoring services we are talking about here. Let’s take a closer look…

  • Ad-supported credit monitoring services – These services will provide your free credit score upon sign up, and they will generally also provide regular updates to your score – once a month for example. They will also usually have credit score tracking tools to help keep an eye on how your score changes over time.

    Ad-Supported services are completely free, no credit card required. So to go back to the example above (HBO vs. NBC), this would be similar to watching a local network TV station like NBC. Great programming, completely free, but you are subjected to more ads which you may or may not be interested in. That is how they are able to offer such a service for free – after all, they have bills to pay too!

    With these services you will find out how your credit rates (poor, fair, good, excellent), and customized tips on improving your score based on your specific situation. They will usually even provide at least some of your credit report data.

    What’s the cost of ad-supported services?

    There’s no actual cost to members of this type of credit monitoring service. However, they will present you with customized credit card and/or loan offers, based on your specific situation. Each time someone applies and is approved for one of those offers, they get paid. That is how they make their money from their members.

    So essentially, viewing their advertisements as you are using their service, is your payment to them.

  • Premium credit monitoring services – These services will also provide your free credit score upon sign up, with regular updates to your score. Some will even give you all 3 of your scores – one for each credit bureau, also with updates for each.

    Premium services (the good ones anyway) are the best of the breed. From the example above, these would be similar to a premium cable channel like HBO. Little to no advertising to distract you and clutter things up. These services usually come with a free trial which lets you try out the service absolutely free for a certain period of time. If you don’t like the service, you can cancel your account and keep your free credit score, just for trying it out.

    These services will often come with many more bells and whistles, such as your full credit reports from all 3 bureaus, alerts of changes to your accounts, extensive identity theft features, and sometimes even internet fraud monitoring.

    They will also give you a rating – such as poor, fair, good – and provide tips and tools for improvement, as well as credit score tracking features.

    What’s the cost of premium services?

    Most of these services will come with a free trial – some are as long as 30 days, some are as short as 7 days. If you don’t like the service, or don’t think it’s worth keeping, just cancel within that free trial period, and pay nothing. You still get your free credit score(s) just for trying it out.

    Others provide a $1 trial, which works the same way except they just charge a buck for the trial instead of giving it away for free.

    After your free trial, if you wish to continue your membership, it will cost anywhere from $14.99 – $19.99/month for the service. They are called premium for a reason – they do cost, but they offer lots of valuable features as well.

Which one is best, Ad-Supported or Premium?

We believe “Premium” is the best (makes sense, right?), but “Ad-Supported” is definitely a great option as well. We recommend trying at least one of the premium services and at least one of the ad-supported services to see how they fit your needs.

You can sign up for a free trial of a premium service, and if you don’t like it, cancel before the trial expires – then you walk away with a free credit score, just for giving it a whirl.

Of course with the ad-supported services, you can sign up for as many as you want to and you don’t have to cancel any memberships if you don’t like them, so no problem there. We believe it’s worth at least checking out the best of each category, if nothing else.

We have created an easy-to-use comparison table specifically to compare the top services in each category – Compare the best here.

Leave a Reply