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Posted: 6:00 a.m. Saturday, April 5, 2014

Get Your Free Credit Score



By Clark Howard

ClarkHoward.com


Your credit score shouldn't be a mystery. Now there's a new way you may be able to see your FICO score for free every month.

I've long talked about CreditKarma.com, which allows you to see your non-FICO credit score for free. CreditKarma is a totally free service that makes money by recommending credit cards and loans that they believe would be suitable for you.

Now First Bankcard, a division of First National Bank of Omaha, will offer its customers a free FICO score each month when they log into their accounts. The company issues cards for more than 600 financial institutions, co-brands, and affinity partners, so you might be eligible for this and not even know it!

Discover is another lender that's now disclosing your score on your monthly statement.

Understanding Codes on Credit Scores and Reports

When you get your credit score disclosure, it may include some alphanumberic codes. If you're wondering what those things mean, there's now a way to find out.

ReasonCode.org is a site that lets you enter a two-digit and/or text-based reason code from a credit score report or disclosure notice you’ve received. Then you get a simple explanation of what it means.

So this site bascially decodes what lenders actually says about you.
Of course, very few people will pay attention to this stuff. But those who do get better deals on interest rates on loans and better rates on auto and home insurance.

How To Improve Your Credit Score

If you're suffering from poor credit, there are several surefire ways to get your credit healthy again. Follow these tips and you'll be well on your way:

  • Always pay your bills on time and pay down the total amount you owe.
    (accounts for 35 percent of your score)
    If you forget all else after reading this, remember this one! This is the single most important rule for having a good credit score.

  •  Keep a low credit utilization rate.
    (accounts for 30 percent of your score)
    Let's say you have a credit card with a $10,000 limit. If you're carrying a balance month-to-month of $3,000, you're only using 30 percent of the total limit. But if your credit limit is suddenly dropped to $3,000, then suddenly you're using 100 percent of what's available to you. That's yet another reason to always pay down credit card debt as quickly as possible. You always want to stay at credit utilization of 30 percent or less.

  • When you pay off a credit card, don't close the account.
    (accounts for 15 percent of your score)
    Doing so only reduces your available credit and drives your score down. You want to have between four to six lines of credit. Be sure to use them twice a year -- even if it's just for a dollar store purchase -- and pay them off right away. That will keep them active in your credit mix.

    If you're facing a huge new annual fee on a card that has a zero balance, try "leapfrogging." That's my term for using the 45-day window you have before any new terms of service go into effect to shop around. So once you get notice about a new annual fee, start looking around for other no-fee credit cards. Submit your application and once you get your new no-fee card, then go ahead and shut down the original one that wanted to spring a fee on you.


The remaining 20% of your credit score is comprised of what types of credit make up your credit mix (10%) and how much new credit you have in your life and how quickly you took it on (10%).

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