Federal law requires that consumers be given access to their credit reports once per year by each of the major credit reporting agencies. But a credit report is not a credit score — it’s basically a record of your borrowing and repayment history.

The Wall Street Journal recently featured an excellent article by Jane Kim that gave an in-depth review of new websites coming on the scene to give you a better sense of where your credit score might fall based on your credit report.

“Now, a handful of companies are launching services that give consumers at least a glimpse at their credit scores free of charge. The sites—Credit.com Inc., Credit Karma Inc.’s CreditKarma.com and Quizzle.com—also offer a window into the key factors that go into calculating your score, what you can do to improve them and how your credit stacks up against others.”

The article goes through each of these sites explaining where they get their data, as well as general strengths and weaknesses. I’ve been using CreditKarma for a couple of months to track my credit score free of charge. The article points out that the credit score CreditKarma shows you is the same score TransUnion sells directly to consumers — something I wasn’t aware of.

These websites are also really great for taking large amounts of data from your credit report and summarizing it into an easy-to-read and digestible format, often taking the form of a simple report card. For instance, when reviewing my credit report card with CreditKarma it gives me all “A’s” except for the category “total accounts”, where I score low because I have very few credit accounts and my score is penalized due to a mix of credit, i.e. no mortgage, car loans, or store loans. If I needed to boost my score, I now know opening up an installment credit account for a new purchase might be one of the best ways to do this.

Free credit report ads are ubiquitous and appear everywhere — including this website. I personally would never pay for these services when there are free sites that serve as a pretty good proxy for your credit score. The only time I might consider paying for a credit score monitoring service is if I was applying for a mortgage or running into problems with identity theft.

Wall Street Journal:
Credit Scores: Can You Really Get them for Free?

Be sure to also check out our article:
Credit Scores 101: How They Work & How You Can Save