How to Monitor Your Credit for Free (Really)
Ed Note: As you’re setting your 2013 financial goals, checking on your credit report and credit score to find out where you stand may be one of your first steps. Guess what? You can do it for free. Yes, really, free. Paula Pant of Afford Anything explains.
Before I tell you the best resources, let me clear one misunderstanding: the idea that checking your credit score harms your credit is a giant myth.
“Hard inquiries,” the type that a credit card or auto dealership makes when they’re deciding whether or not to extend you credit, can hurt your score. But “soft inquiries,” like checking your own credit, don’t affect your score.
That said, where can you find free resources to monitor your credit score?
There are three major credit-rating bureaus: Experian. Equifax and TransUnion. Each bureau allows you to check your credit report once a year for free .
The best way to space this out is to check your credit report with one bureau every four months. You might, for example, check your Experian report in January, your Equifax report in May, and your TransUnion report in September. This will help you spot flaws and errors more quickly than checking your report from all three bureaus on the same day of the year.
Note, however, that the bureaus will only allow you to see your credit report, which is different from your credit score. A credit report is an itemized list of your activities (such as your mortgage, car loans and credit cards). The list contains notes like your credit limit, the amount of available credit that you’re using, and whether or not you’ve made
any late payments.
It does not, however, give you a numerical score. That score – your “credit score” – is available for free from Credit Karma. although it uses data only from TransUnion. One of its competitors, Credit Sesame. also offers free scores, though it uses data only from Experian.
Neither of these are the official FICO score, which is compiled from data from all three agencies. But these are “equivalency scores” that can give you a reasonable idea of what your FICO score might be.
You can get your official FICO score through myfico.com. although the website will sign you up for a “free 10-day trial.” If you don’t cancel within that period, you’re obligated to a minimum 3-month period of credit monitoring for $14.95 per month.
Unless you want ultra-specific data, the “equivalency scores” from Credit Karma and Credit Sesame will give you solid answers, without the annoying “free trial” period.
What other resources are out there?
Annualcreditreport.com will allow you to check your credit report once a year for free, but it charges you to see your score. However, you’ll see the actual FICO score from all three agencies. The U.S. Federal Trade Commission recommends annualcreditreport.com on its website.
Here are two unusual ways to access your credit score: use a peer-to-peer lending site.
Prosper.com and LendingClub.com are both sites that let ordinary people borrow and lend money to one another, without a bank as a middleman. They both show “grades” for borrowers, based on the prospective borrower’s credit score. AA means your score is above 760, A means its 759 to 720, and so on. This is another good – if unusual – way to access your credit score for free.