Certified financial planner Wes Moss provides personal finance advice and accessible investment strategies. His guest post appears here weekly.
Flipping around the TV the other night, I came across yet another new ad for freecreditscore.com — you know, the one with that shaggy guitar player and his annoying band? I suppose it’s a good commercial because I remember it, but what about the product? Are such “free” offers really free?
There are dozens of sites with similar offers. They promise to give you a free credit report, and/or your credit score, usually when you sign up for a free trial of their credit monitoring service. The credit report is a listing of the recent activity related to your credit, including loan balances, open accounts and any legal action taken against you related to borrowing.
Want a new credit card? A lower insurance bill? A better loan rate on a car or home? Your credit plays a big part in all that. It can even be a factor in getting that new job.
Your credit score, also known as your FICO score, helps lenders assess your credit-worthiness. It’s based on several factors, including payment history and the amount of credit you have recently acquired. Some “free report” sites offer to provide your actual FICO score; others give you an “educated guess,” known in the industry as a “FAKO score.”
Comparing five different sites
I recently checked several “free” sites to help find the credit information you need, without being charged, or at least not paying more than expected, ranking them from 1 (worst) to 5 (best):
Creditkarma.com: Offers an estimated (FAKO) credit score — not your true FICO score — but it really is free. It does a nice job of showing your open credit lines, but falls short of providing a concise overall credit report card. Rank: 3.5
Quizzle.com: My favorite credit reporting site. It provides an “estimated” score and a truly free credit report from Experian, one of the big three credit reporting bureaus (Equifax and Transunion are the others). The site is remarkably user-friendly, making it easy to see your actual report. 4.5
MyFICO.com: Provides your actual credit scores for a fee. These are your real FICO scores from the big three bureaus. If you sign up for a “free trial” you can get one score before you have to pay anything. (Your credit card doesn’t get charged until the free trial ends.) I was able to get my Equifax score and a very detailed credit report, which was very useful and easy to read. 4
Annualcreditreport.com: Allows you to see a credit report from each of the big three, for free, once a year. However, there is a fee to get your FICO scores. 3.5
Freecreditscore.com: I had to sign up for a “free trial” in order to get a score and had only a week to cancel or be charged a monthly fee. It gave me an Experian score for “free,” but I had to sign up to get it. To get the credit report behind the score, I had to pay $2.95. 2.5
Once you’ve determined your credit situation, here are things you can do to protect or improve it:
• Pay your bill on time — or early, if possible.
• Don’t bump up against your full credit limits.
• Review your credit report for any errors that might hurt your score.
• Don’t close unused credit card accounts. That’s because the amount of credit you’ve been granted factors into determining your score. An open card with no balance may help your “utilization” ratio.
Establishing and maintaining good credit requires time and vigilance. Taking care of the little things, like paying that credit card bill on time (or early) and understanding your credit rating, will – among other things — help save you money the next time you have to borrow money.
OK, now, be honest: How often do you check your credit information?
Now, be really honest: When was the last time you checked it?
– Wes Moss, for Atlanta Bargain Hunter