Don’t pay to manage your credit score

I was asked earlier this week what’s the best way to check a credit score? There are a few ways to get your credit score, but check to see what your credit card company offers first. Many credit card issuers now provide cardholders with their credit score as a free benefit.  The card issuer I use provides my FICO® score, score history, key factors affecting my score, and suggestions on how to improve my score. 

What’s a FICO®? It stands for Fair Isaac Corporation. Fair Issac is the largest and best known of several companies that provide methodologies for calculating a person’s credit score, but the FICO® score is the most widely used. You actually have three FICO® scores, one for each of the three credit bureaus: Equifax, TransUnion and Experian. Although usually close, the score provided by each bureau (and your credit card company) can be different based on how the underlying data is used to compute the score.

When it comes to managing your credit score, I recommend the following three actions:

(1) Check your score at least once a month

When you access your credit card statement online each month, also check your credit score. If your score has gone down by a lot, find out why that happened. Did you do something to cause the change or was it something nefarious? Exhibit 1 below shows what your score means to lenders.

(2) Understand what actions you can take to improve your score

As mentioned, many times the credit scoring service provided by your credit card company will offer information to help you improve your score over time. Some services may even allow you to simulate the impact of specific changes on your score. It’s important to have a solid credit history and good credit score because it:

  • makes it easier to qualify for more credit;
  • lowers the rate you pay on credit and other products, such as mortgages, personal loans, and insurance;
  • positively affects your ability to qualify for some services, since many businesses (e.g., landlords, utility providers, and employers) use your credit score as a way to predict your future financial responsibility.

Exhibit 2 shows the factors that drive your credit score. As you can see from the exhibit, 65% of your score is driven by payment history and amounts owed, so make sure you pay your bills on time and pay down your revolving (credit card) debt. provides a complete list of ways to improve your credit score.

(3) Review your credit reports for mistakes annually

FICO® scores are based on the data found in your reports at the three credit bureaus. While the credit bureaus do a very good job accounting for your personal credit information, it is worth checking your data to make sure there are no errors. Checking these reports will also allow you to catch any fraudulent activity, like someone trying to open a new account in your name. Free copies of your credit reports from all three bureaus are available once a year from

As an alternative to manually checking your reports annually, you can use a service to monitor your credit reports and promptly alert you of any changes. Some issuers include free credit report monitoring as part of the program, so check with your credit card issuer first.

All the information you need to manage your credit score is free, so optimize it by checking your score monthly and reports annually, and by following through on recommended actions to improve your score as needed.

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