HapiMoney

I just came across an interesting site called CreditKarma, thanks to a close friend of mine.  It’s been around for a few years, but I hadn’t yet heard about it. It offers to provide you with a quick, easy and FREE credit score, unlike other sites which cost money each time you use them.

It sounded a bit fishy at first, mostly because I am skeptical of all services which require me to put in lots of personal information. In the name of science and insane curiosity, I checked it out. Sure enough, it was, indeed, quick, easy and free.

Here’s a snapshot of what the CreditKarma dashboard looks like to a signed in user:

Obviously, it provides some nice graphics and easy to read score analysis.  I also learned a few interesting things about my particular credit score. Your score is more or less based on 7 things:

1. Open Credit Card Utilization – Having access to credit but not maxing it out is a GOOD thing.
2. Percent of On Time Payments – Do you pay your creditors back on time?
3. Average Age of Credit Lines – Having an older credit line shows creditors that you’ve got good history.
4. Total Accounts – More people willing to give you credit is seen as a good thing (I think this is nuts, but more later)
5. Hard Credit Inquiries – The number of times new creditors ask for your credit score. More can be seen as a warning sign that you’ve been scrounging for cash from a lot of different people. “Soft” scores like requests made on your behalf are not counted.
6. Total Debt – Obviously, tons of debt is not a good thing.
7. Debt to Income Ratio – Do you make enough money to cover your interest payments?

One of the crazier things to me was the number of accounts opened. I received an “F” rating in this category due to my measly 3 credit accounts (1 credit card, and 2 debit cards…I avoid debt like the plague). Apparently, in order to have an “A” rating, I would need to have over 40 different accounts opened. This is INSANE, and I will never ever ever do this. Nor should you!

Moral of the story is check out your credit score. If you find something a little odd, make sure to go to the Annual Credit Report Agency.