How to Get a Free Copy of Your Credit Report

You can view your credit report for free at www.AnnualCreditReport.com. This report does not include your credit score but it can be purchased for $12.

There are actually three credit reporting agencies, and each of them is required to give you one free report per year. That means you can actually get 3 free credit reports each year, by requesting 1 report from each reporting agency. I suggest that you stagger these requests out over several months, rather than requesting from all 3 reporting agencies at once.

Important! AnnualCreditReport.com is the ONLY legitimate website to request your free credit report.

There are many websites that offer a free credit report as part of a promotion, but you generally must sign up for a service to receive your credit report. These services can be much more costly than just purchasing your credit report, so proceed with caution if you sign up with any of these companies.

There are also a lot of scams out there. Be wary of companies that offer to fix your credit or erase your negative credit history. These are generally scams.

I recently discovered a website called CreditKarma.com, where you can request your credit score (the actual 3-digit FICO score) for free.

I was concerned that there might be strings attached, so I had to check it out for myself.

The registration process was very quick and easy, and the application to retrieve your credit score was much easier than the process to request your credit report from one of the three reporting agencies.

Credit Karma does not provide a copy of your credit report. They provide your 3-digit FICO credit score only.

Immediately below your score are credit offers from partners of Credit Karma that are based on your credit score. These offers are how Credit Karma pays the bills, so they are necessary and may even be beneficial if you are looking to establish credit or make a purchase soon.

So, while you still need to check your actual credit report at least once a year (to check for fraud and/or errors), if you are just wanting to check up on your credit score, I recommend CreditKarma.com.

There are five key elements that comprise your FICO score: payment history, outstanding debts, credit history age, inquiries, and account types. Each of these items is given a different weight in the algorithm that determines your FICO score. Payment history is 35% of the score, outstanding debt is 30%, credit history age is 15%, and both inquiries and account types are 10% of your total FICO score.

Now you know what components are included in your credit score. What does each of these include? More importantly, what's considered good and what's bad for each component?

Payment History
Your payment history includes the details of how you've been paying your bills. That is, if you've been paying them at all. Each of your credit accounts reports your payments as on time or late. Late payments are reported as being 30-, 60-, 90-, and 120-days late. After six months of non-payment, many creditors charge-off your account, deeming it as an uncollectible account. The more recent the late payments are, the worse the effect it is on your credit score. Timely monthly payments boost your score in this area.

Outstanding Debts
This portion of your FICO score takes into account the total amount you owe on all your credit accounts. This includes credit cards, student loans, auto loans, mortgages, lines of credit, etc. Not only does the FICO score consider the total amount you owe, it also considers the total credit you have available. This ratio is known as your credit utilization. The higher your credit utilization - meaning the closer your balances are to the limit - the lower your credit score. You should keep credit account balances at or below 30% of the limit.

Credit History Age
The length of time that you have had credit is a determining factor of your FICO score. A longer credit history is better than a shorter one. This is because there is more data to create a pattern of good or bad payments.

Inquiries
Each time a business uses your FICO score to make a credit-based decision about you, an inquiry is made to a credit bureau. This inquiry then appears on your credit report. Multiple inquiries within a relatively short period of time have a negative effect on your FICO score, especially if these are credit card inquiries. Few to no inquiries is better. The good news is that only inquiries from the past two years are factored into your FICO score.

Account Types
When you have several different types of credit accounts - loans and revolving credit - it is better than having a single type of credit account.