Churning: Tracking and Understanding Your Credit Score

One of the most important factors in churning is your credit score.  It determines which cards you will to be approved for, how much your credit limit will be on each one, and how many cards credit card issuers are comfortable letting you have at once.  Understanding what affects your score and being able to track it while churning is key to success.  Below I’ll explain how to obtain your credit score and credit reports for free, how your credit score is determined, and how churning may increase or decrease your score.

In the United States, there are three major credit bureaus, Experian, Equifax, and TransUnion.  There are also a couple of smaller bureaus, but for the most part they can be ignored.  Each of the three major credit bureaus tracks a credit report for you independently from the others, and the information in these credit reports is what determines your credit score.  Almost all of your lines of credit will appear across all three bureaus, but hard inquiries may only appear on one of them.  Applying for significant credit such as a mortgage or auto loan will probably result in the issuer checking all three bureaus, but when applying for a credit card they often only check one.


How to Obtain Your FICO Credit Score

FICO is the industry standard algorithm for calculating your credit score and almost all credit issuers rely on some version of the FICO algorithm.  There are several websites that will sell you your FICO credit score for a price, but I don’t recommend using any of them because it is possible to get an estimate of your score from each of the 3 major bureaus completely free.  While these estimates are typically referred to at FAKO scores because they aren’t real FICO scores, they can do a good job of letting you know about where you stand with each bureau.  Every credit issuer interprets your FICO score in different ways and includes other factors such as your income when deciding whether or not to issue you credit.  So even if you know your exact score, it is impossible to know for sure whether or not you will be approved for a new card.  This is why I advise against paying for your score.

Free Ways to Obtain Your Real FICO Credit Score

Before I get into the various free sources for FAKO score estimates, there are several ways to obtain your official FICO score depending on your personal situation.

Free FICO Credit Score Through Credit Cards

  • Discover cards currently offer a free TransUnion score both on their monthly statements and through their online account page:
My Discover It card allows me to view my TransUnion FICO score for free
  • Barclaycard also offers a free TransUnion score via their online account page. Look for the following link on your accounts main page to check your score:
If you have a credit card issued by Barclay’s, look for this link in your online account to get your TransUnion FICO score for free
  • First Bankcard, US Bank, and Walmart credit cards also offer a free credit score through the online account pages if you have one of their cards.
  • Other credit cards also offer FICO scores through various paid services, sometimes starting with a free trial, but be careful not to start paying extra just to see your score.

Free FICO Score Through Promotions

  • Wells Fargo has had an annual promotion the last three years that allowed customers to check their Experian FICO scores for free. The most recent promotion ended Nov 16, 2014, but there is a good chance it will appear again next year.

Free FICO Score When Applying For Credit

  • If you have recently applied for a major line of credit such as a mortgage or auto loan, then the credit issuer may have given you your report and score for free. If you did not receive one, it may still be possible to contact the issuer and have them send it to you, but the policy for doing this will vary based on the company.
  • Some credit card issuers will include the FICO score(s) they used to determine whether or not to issue you credit in your acceptance or denial paperwork sent via mail. This isn’t a practical way to obtain your credit score, but is a useful side-effect of applying for new credit cards.

Obtaining a Credit Score Estimate (FAKO Score) for Each Credit Bureau

There are several websites that offer a completely free credit score estimate after signing up.  While they will pull your credit to obtain the score, it will not show up on your report or affect your credit in any way.  That is because these are “soft” inquiries which are treated differently than “hard” inquiries that happen when you actually apply for credit.  Each website will update your score at different intervals and some currently offer your actual credit report alongside the FAKO score.  If you are unable to get an official FICO score from each of the three bureaus, I recommend at least getting a FAKO estimate.  This allows you to track your score over time and better understand why you are getting approved or denied for new lines of credit.

  • Equifax
    • – I highly recommend this website for tracking your money and spending across all of you different accounts, but they also recently launched a feature that allows you to check your Equifax score for free. In addition to the score, they also give a snapshot of your credit report via the major factors that influence the score.  The score and report snapshot will update for free every three months.  Signing up for their Credit Monitoring service is NOT required to see your Equifax score estimate.
    • – Quizzle used to be the only way to obtain a free score estimate from Equifax before started offering one. They still have an advantage over Mint because it gives you a detailed look into your credit report such as specific account information and a list of hard inquiries, but will only update your score and report every six months.  They also push their paid services pretty hard, which is a pain to navigate through, but despite the limitations they are still a good resource for tracking your Equifax credit for free.
  • Experian
    • Credit Sesame – This website allows you to get a free Experian credit score estimate which will update monthly. Credit Sesame doesn’t offer very much information about what’s contained in your actual Experian report, but it is the only way I know of to get a free estimate of your Experian score without signing up for a free trial to a paid service.
  • TransUnion
    • Credit Karma – Credit Karma is the free resource for getting a TransUnion credit score estimate and will update your score weekly. In addition to your score, they also offer a look at your full credit report from TransUnion.  This feature is currently marked as a “Beta” though so there is no guarantee they will continue to do so in the future.  While I like Credit Karma’s UI, weekly updates, and full credit report feature, the score isn’t very accurate for me at the moment.  Because I get a free TransUnion FICO score monthly from my Discover card, I can compare it to Credit Karma’s FAKO score.  Currently mine differs by around 60 points, but the accuracy will vary for every individual.


Understanding Your Credit Score

Once you have obtained your credit score from one or more locations, it’s important to know what factors influenced your current score and how additional credit actions will affect your score going forward.  While the various FICO algorithms are secret, the official website has lots of information on what does and does not affect your score.  I recommend taking a little bit of time to read through the information at to get an understanding of what influences your score.

Everything that can impact your credit score is contained in your credit reports.  Each credit bureau has its own credit report for you and while the information will generally be the same across them, discrepancies are possible and even expected in certain cases (inquiries are not consistent across bureaus in most cases).  All three of the major bureaus allow you to obtain a free copy of your credit report once per year and I recommend doing so to stay on top of any possible errors or identity theft.  While many websites offer paid services that allow you to view these reports, the official website is  You should never have to provide a credit card or other payment information to access your free annual credit reports, so if you are prompted to do so, double check what website you are on.  The credit report will not contain your FICO score, but it does contain all the accounts and information that affect your score.


A More Specific Breakdown of Credit Score Calculation

The official FICO website offers a high level overview of what affects your score via the following chart obtained from

FICO breaks down the impact of different categories that are used to calculate your credit score.

In addition, Credit Karma and Mint both break down the components above into six distinct groups that are easy to understand.  It is hard to determine exactly how much each one impacts your score, but moving them in the right direction will increase your score.

  • Credit Card Utilization: This has a high impact on your score and is calculated by taking adding up the most recent reported balances for each of your credit cards (the last statement balance in most cases) and dividing by the total sum of all your credit card limits. Both Mint and Credit Karma recommend keeping this below 20% for optimal credit, but it is also important to keep it above 0% to show you are using credit.  Despite what you may have heard, you DO NOT have to carry a balance month over month and pay interest to help your credit score.  Paying the statement balance in full before the due date will positively affect your score in the same way, and does not require paying any interest or fees.  Credit card utilization has no memory, so only the most recent account balances will affect your credit score.  This means it is possible to pay down most of your account balance before the statement date to lower your utilization, and then pay the rest of your balance after the statement date.  In most cases, you won’t see a benefit from this, but if you spend above 20% of your credit limit on a monthly basis, it may help your credit score to minimize you utilization in this way.
  • Payment History: This has a high impact on your score and is simply a percentage of how many of your payments have been on time. Obviously, 100% is the ideal percentage here as anything lower will affect your score negatively.  The more accounts you have open, the more difficult it may become to keep track of all the due dates which is why staying organized it so important.
  • Derogatory Marks: This is a count of how many negative marks show up on your credit score in the form of outstanding collections, bankruptcies, liens, or other negative marks. These are very important to avoid as they affect your credit score in a big way, so once again stay organized and pay all of your debts on time.
  • Age of Accounts: This encompasses both your average age of accounts as well as your oldest and youngest accounts respectively. Credit Karma indicates this has a medium effect on your score.  Mint recommends having an average age above 9 years while Credit Karma recommends at least 8 years for the optimal score.  Closed accounts will still show up on your credit report for 10 years and age during that time, but fall off completely at the end and no longer affect your score.  As the oldest account is often considered alongside the average age, it is recommended to not close your oldest line of credit, especially if there is not an annual fee.  If your oldest line of credit does have an annual fee associated with it, it may be possible to downgrade to a no annual fee version of the card without interrupting your line of credit.
  • Total Accounts: Mint and Credit Karma both indicate that the more accounts you have, the better your credit score will be with 22 accounts being the minimum required for their highest rating. While this has a low impact on your score, it is another item to keep in mind when deciding whether or not to close old lines of credit.
  • Credit Inquiries: This is the number of requests you have made for credit in the past 2 years and has a low impact on your credit score. Credit Karma reserves its highest rating for this category for 0 inquiries, while Mint allows up to one for its highest rating.  While hard credit inquiries show up on your report for 2 years, they will only impact your score for the first year.  It is important to avoid unnecessary pulls of your credit, but hard inquiries that show up on your report will most likely only drop your score by a few points.


How Churning Impacts Your Credit

Opening a significant number of credit cards in order to gain the benefits of doing so definitely affects your credit score, but not in the way you might think.  Let’s look at how two common events in churning affect your credit score.

Opening a New Account

  • Number of Hard Inquiries Increases: Any attempt in getting a new credit card will result in a hard inquiry showing up on at least one the bureau’s credit reports. This may drop your score a few points initially, but the impact will lower over time.  If you are declined the new line of credit, this is the only thing that will affect your credit score.

The next three effects apply only if you are approved for the new line of credit:

  • Average Age of Accounts Decreases: Your newest line of credit will start at 0 months old (in most cases) and this will lower your average age and reset your newest line of credit to 0 months. Both of these have a negative effect on your score, but how much will depend on your other lines of credit and their respective ages
  • Total Number of Accounts Increases: This has an overall positive effect on your credit score and additional accounts also means additional on time payments which improves your payment history, especially if you have had a late payment in the past.
  • Credit Utilization Decreases: With your total line of credit increased by the new credit card, your overall utilization will drop, creating a positive effect on your score.

The two downsides of opening a new credit card, a new inquiry and lower average age of accounts, are offset by the positive effects of more accounts and lower utilization.  Overall, this may have a small negative effect on your score in the short term, but a real positive effect over the long term if the account is kept in good standing.

Closing an Account

  • Credit Utilization Increases: The only immediate effect of closing an account on your credit score will be from the increase in credit utilization because your overall credit line will be lower. This may or may not actually impact your score depending on your current utilization percentage and other open accounts.
  • Eventually, Number of Accounts and Age of Accounts Decreases: Closed credit accounts stay on your credit report for up to 10 years and are still counted towards your total number of accounts and age of accounts during that time. When they eventually drop off after that time, the number of accounts and average age of accounts will most likely decrease.  These both have a negative effect on your credit score, but if your overall credit has been in good standing for those 10 years, the impact will be very minimal.


What It All Means

Keeping track of your credit score is important regardless of your interest in churning, and even though the exact calculations remain secret, improving your score should be easy over time if you stay organized and don’t overextend your spending or miss any payments.  Churning involves opening several new credit lines and most likely closing them after some period of time.  Knowing how these impact your credit score is important so you don’t hinder yourself in the future when you try to get a loan.  Individual credit actions will affect everyone differently, so I recommend you request your free credit reports annually and keep tabs on your FICO or FAKO score estimates from each bureau.  Personally, my credit score has increased since I started churning, but that is no guarantee that yours will do that same.

One thought to “Churning: Tracking and Understanding Your Credit Score”

  1. I’ve read roughly 10-15 abstracts/breakdowns of the affects of churning on credit score. Although you’ve captured the essence of what I’ve read in nearly every other account, where your analysis shines for me is how you balance the negative aspect (AAoA, # inquiries) with a comprehensive accounting of the pros (utilization ratio AND number of accounts). Most other analyses just wave away and require you to take on faith that the hard inquiry is soon offset with positive gains in credit score.

    Great site otherwise, too!

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