These two questions are so common and so important. Knowing when to check your credit report and what you should look for can not only help to improve your score, but it can save you if there’s an error or fraudulent activity.
Credit reports contain all the details of your payment history as well as your debit-to-credit ratio. Unless you have a specific reason to review it—you’ve been the victim of identity theft or you’re planning to request a loan—checking your report annually is probably okay. Everyone is entitled to a free credit report each year from each of the three major credit reporting agencies, Equifax, Experian and TransUnion. This can easily be obtained from .
Your credit scores, which help lenders decide whether to extend your credit and at what interest rate, are calculated from the data in in your credit reports. Checking these at least once a year is a necessity. However, if you plan to apply for credit, like a car or home loan, or if you are trying to rebuild your credit, you should monitor your score about once a month. Most credit card companies offer a free monitoring service and will email you with updates and changes in your score. You can also get free scores from consumer websites, like , that are free and offer information on how to improve your score.
There are monitoring services that allow you to check your score as often as you’d like—you could check everyday. However, obsessing over a daily report can be stressful and your scores are likely to fluctuate. The goal of checking your score is to look for inconsistencies and other trends, not really day-to-day changes.
When you choose to check your score, you’ll want to first make sure that your information is accurate and not confused with someone else’s, (this does actually happen!). Make sure you look at all three scores, as the information varies because the bureaus do not share information with each other. At first, check all three and look through them carefully. Going forward, you can check each score in different intervals, like one every four months or so.
If you notice an error on your report, make sure you contact the bureau immediately, disputing claims can be a lengthy process and you’ll want to resolve the issue as quickly as possible. If you do find an error, identify theft or otherwise, make sure you check your report diligently for at least a year after, to ensure that it’s corrected.
Reviewing your report for open and closed accounts is also critical. If you’ve closed old accounts, they should be shown as such. If you see an account that you didn’t open, this can be an indicator of identity theft and should be dealt with immediately.Another important area to check on your report is hard inquiries. A hard inquiry is done when you apply for new credit. If you see a lot of these inquiries on your report that you didn’t authorize, someone could be using your information to try to obtain credit.
Your credit report is a very important aspect of your financial life and should be treated as such. Checking it on a regular basis and knowing what to look for can help you avoid errors and identify theft.