Credit karma is and has been my favorite FREE way to keep track of my credit score over the last 7+ years.
Keeping track of your credit is just as important as having a budget. If you want to qualify for the lowest rates for mortgages/loans, have lower insurance rates and be able to borrow money to earn rewards- then you need to know how to have good credit!
Credit karma is laid out in a way that's easy to follow. After creating an account (if you don't already have one) you can customize the things you want to see or work towards.
There are 6 factors credit karma looks at for your credit score and they are laid out from highest to lowest importance, but they are ALL important.
1. Payment history- how many on time payments you have. The goal is to have 100% on time payments.
2. Credit usage- credit karma suggests have a utilization of less than 30%. The more available to you, the more you can use without affecting your credit usage negatively.
3. Derogatory remarks- this includes public records, charge offs, bankruptcy, collections, etc. These will hurt your credit. Don't use borrowed money you cant pay back and that will help avoid this category.
4. Total accounts- the more accounts, typically the better. (As long as they are in good standing). Open account and closed accounts count towards your total accounts.
5. Credit age- 7+ years of credit age us what credit karma recommends. This is an average of your first account opened to the most recent account opened. If you open too many new accounts at once- this will significantly shrink your credit age.
6. Hard inquiries- inquiries typically last on your report for 2 years. Trying to keep 2 inquiries per year is what credit karma suggests.
Scroll through these images to see a bit more detail. These are screenshots of my own reports from credit karma.
Let me know what questions you have!
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