Lesson 2: Credit Score

If you ever have any questions about The Begginers GUide, big or small, feel free to email me at FrequentFlyerUniversity@gmail.com.

Lesson 1 Recap

In Lesson 1, we talked about the importance of signing up for a free mileage tracking service like AwardWallet. The objective of this was to help you get a clear picture of what miles you have, so you can start to get an idea of what program you would like to accumulate your miles in. (ie. in United, Delta, American, etc)

Before we jump into signing up for Credit Cards to earn thousands of free frequent flyer miles, there is one more thing we have to address.

Just as it was important to know how many frequent flyer miles you have, it is also important to know your financial health.

I have written about get your credit score for free in the past, but for the thousands of new FFU readers I will do a quick recap.

Importance of Credit Scores

The reason why it is extremely important to get your Credit Score & Credit Report is because you want to make sure both are clear of anything that may cause a Bank to deny you approval for a Credit Card.

Things That Can Cause Denial:

• Little or No Credit History
• Delinquent Accounts
• High Credit Usage Percentage

Even if you pay off your bills every month and have never had a late payment, it is still extremely important to frequently check your Credit Score and Credit Report.

2 Cautionary Tales:

My Dad thought his report was fine and never checked it until I had him apply for the Chase Continental Card last year. Unfortunately, he was denied because some silly Credit Card company 15 years ago had wrongly posted to his report that a closed account was delinquent. Although it was an error, until he got that mistake fixed, Chase refused to accept him for the Continental Card even though he had a Credit Score close to 800.

Similar thing happened to my friend. I checked her free Government Credit Report and due to the fact that she has an extremely common first and last name, the credit reporting agency mistakenly added someone else’s Discover Card  (who happened to have the exact same name) to her’s file.

The only reason I caught it was because

1. She doesn’t have a Discover Card
2. The account had been open for 15 years, making her the financially prudent age of 10 when she apparently opened the account.

Luckily for her, this person with the exact same name paid all their bills on time for the last 15 years! So in this case, I suspect it actually boosted her score.

The point of these 2 stories is that out of the 3 people’s reports that I checked (Myself, my Friend, and my Father’s), 2 reports had mistakes! Yes, they weren’t due to identity theft or anything super serious, but regardless they were still mistakes!

It is for this reason I try to check my score via Credit Karma and Credit Sesame every month! With the amount of phishing (no, not the band) going on, you can never be too sure.

Many companies and websites are so afraid of seeing their reputations get hurt, that even if customer’s personal information has been compromised, they are reluctant to share it with you until they fully “investigate” the matter which can take months.

That being said, for many people just starting to earn miles, this may be the first time you are seeing your Credit Score outside of applying for a mortgage or loan.

Michael Chu, a FFU reader, commented in the past about how Credit Scores are calculated. If you are interested in reading his super detailed analysis, you can find it here.

Free Credit Scores

All the sites below are 100% free, no gimmicks or catches, and you don’t even have to enter your Credit Card number! (unlike FreeCreditScore.com).

I recommend signing up for all of the sites below because they all use different techniques to calculate your score. This way you get the most accurate score.

With the exception of the Government site, each site maybe takes 2 minutes to sign up.

• Credit Sesame
• Credit Karma
• Annual Government Credit Report

The Annual Government Credit Report is provided free by the Government and you can get access to all 3 Credit Reports (TransUnion, Experian, and Equifax). However due to classic lobbyist shenanigans, these Government reports won’t provide you with your Credit Score (even though that is how most Credit decisions are reached) and you can only access each of the reports once per a year (unless you want to pay a fee for a report that you are legally entitled to).

Therefore to maximize this “free” resource, I would suggest that today you check only 1 report (ie TransUnion) and then in 4 months check another report (ie Experian) and then another in 8 months check the last report, so you can always have an up to date Credit Report!

After you get your Credit Score and Credit Report, you should have a pretty good sense of your financial health and be ready to apply for some easy miles!

Disclaimer

Now while most people are sensible with their Credit, I feel obligated to provide this disclaimer!

If your Credit Score is too low (less than 700) or you are currently having trouble paying your bills or only make the minimum payments on your Credit Card, then please do not go signing up for airline credit cards regardless of how large the sign up bonuses is! It doesn’t matter how you do the math, the sign up bonus will in no way cover the amount of fees and interest you will incur over the life of the card. Remember you can’t close a card if you are carrying a balance, meaning that you will also get hit with the annual fee every year.

Click below to continue to Lesson 3

Link To Lesson 3