Your credit score is important. It’s a number that potential lenders look at to determine whether or not to extend your credit and, if so, at what terms. A high credit score means you’re a low-risk borrower, which could lead to a lower interest rate on a loan. A low credit score could lead to a higher interest rate and could mean you won’t be approved for a loan at all.
How Often Should You Check Your Credit Score?
The Consumer Financial Protection Bureau (CFPB) and many experts recommend checking your credit score once per year. That’s it. Just once per year. There are several reasons for this. First, your credit score is based on the information in your credit report. And that report is updated every month. So, unless something has changed in your report, there’s no need to check your score more than once per year.
Second, checking your own credit score will not affect your score. However, if you apply for credit too frequently, that can have a negative impact on your score. That’s because each time you apply for credit, the lender will do a hard inquiry on your report, which could ding your score by a few points. So, checking your own score once per year is sufficient.
If you’re planning on applying for credit in the near future, you can check it again just prior to applying to make sure nothing has changed that would impact your chances of being approved.
What’s on Your Credit Report?
Your credit report includes information about your borrowing history and current debt obligations. It also includes information about any derogatory items, such as late payments, bankruptcies, and foreclosures.
The goal of checking your credit report is to make sure that all the information contained therein is accurate. If you find any errors, you should dispute them with the credit reporting agency.
How Can You Check Your Credit Report?
Free Annual Credit Reports
If you’re not sure how to check your credit score, don’t worry – it’s easy!
Visit annualcreditreport.com. This is the only site authorized by the federal government to provide free credit reports. Enter your name, Social Security number, date of birth, current address, and previous address (if you’ve moved in the past two years).
You’ll also need to enter some basic information about your employment history and financial situation. Select which credit reports you’d like to receive. You can choose to receive all three reports at once or space them out throughout the year.
- Credit Karma or WalletHub
You can also check your credit score for free using a service like Credit Karma or WalletHub. However, keep in mind that these scores are only estimates and may not be exactly what lenders use when making decisions about loans and lines of credit.
- Major Bureaus
For the most accurate picture of your credit health, it’s best to check all three of your credit reports from the major bureaus. You can get a free copy of your credit report from each of the three major credit reporting agencies – Experian, Equifax, and TransUnion – once every 12 months. Simply go to their website and follow the instructions.
There are a variety of options for getting your credit reports, and the best way is going to be based on what you need. You can get copies from paid services that offer other benefits as well, like monitoring or identity theft protection, in various packages – just keep in mind they generally don’t provide all three at once so make sure to request extra if needed!
Why Should You Check Your Credit Report Regularly?
It can help you catch errors.
Your credit report includes information about your payment history, debts, and any bankruptcies or foreclosures. This information is gathered from your creditors, such as your lenders, landlords, and utility companies. Sometimes, this information is reported incorrectly.
For example, you may have been reported as late on a payment even though you paid on time. Checking your credit report regularly can help you catch these errors so that you can dispute them with the appropriate party.
It can help you identify signs of identity theft.
Identity theft occurs when someone uses your personal information without your permission to commit fraud or other crimes. If you see items on your credit report that you don’t recognize, it could be a sign that you’ve been a victim of identity theft.
These items could include new accounts that you didn’t open, collections accounts for debts that you don’t owe, or Charged Off accounts that have been paid off but are still being reported as unpaid debts. If you see anything on your credit report that looks suspicious, contact the credit bureau and the company that issued the account to investigate further.
It can help you track your progress.
Checking your credit report regularly can also help you track your progress over time. For example, if you’ve been working on paying down debt and improving your payment history, you should see this reflected in your credit report. Seeing these positive changes can give you the motivation to continue working towards improving your credit score.
What Happens If You Don’t Check Your Credit Report?
If you don’t check your credit report regularly, you could miss out on opportunities to improve your financial health. For example, if there’s an error on your report, you might not realize it and continue making payments toward a debt that you don’t actually owe.
Or, if there’s fraudulent activity on your account, you could find yourself in financial hot water without even knowing it. By checking your credit report regularly, you can catch errors and fraudulent activity early so that you can take steps to fix them right away.
Finding Errors In Your Credit Report – What To Do
According to a study by the Federal Trade Commission, one in four consumers found errors on their credit reports that could lead to lower credit scores. That’s why it’s so important to regularly check your credit report for any errors or potential red flags. In this blog post, we’ll explain how to find and correct errors on your credit report.
First, pull your credit report from all three major credit bureaus (Experian, Equifax, and TransUnion) and review them carefully. Look for anything that appears inaccurate, such as missed payments, collections that you don’t recognize, or accounts that aren’t yours. If you see anything that looks incorrect, dispute the error with the credit bureau immediately.
You can do this by writing a letter to the credit bureau explaining what the error is and including any documentation that supports your claim. The credit bureau will then investigate your claim and make any necessary corrections to your credit report. Once the investigation is complete, you should see an updated copy of your credit report reflecting the correction.
In short, checking your own credit score once per year is sufficient. If you’re planning on applying for credit in the near future, you can check it again just prior to applying to make sure nothing has changed that would impact your chances of being approved.
By checking too often and/or by applying for too much credit too frequently, you could actually hurt your chances of getting the loan or lines of credit you’re after. So, check yearly and only when you need to apply for new credit!