How Often Should You Check Your Credit Report?
Modern life seems to revolve around credit. Having a good credit rating makes it easier to purchase a car, get a mortgage, and sometimes to set up the utilities for that home. It’s hard work to establish your credit and maintain it — and this hard work creates a credit record.
The record of how you’ve used your credit and whether you’ve managed to pay your charges is important because you can’t make the large purchases you might want or need without a clean credit history. The history of your credit use is recorded by one or all three credit bureaus, and this record is called your credit report. You should check this report as often as possible to make sure nothing is bringing down your credit score.
A credit report greatly influences whether you can get a loan, mortgage, credit card, and more. That’s why it’s important to know not only how your credit works, but also how to read and access it. It’s also helpful to know how often you should check it and what to look out for.
What is a credit report?
There are three main credit bureaus in the U.S.: Equifax, Experian, and TransUnion. Each credit bureau has a record of your credit usage, depending on who the merchants and businesses report credit obligation information to. These credit bureaus compile your credit use and obligations into a report.
This report can contain a lot of information about you. The four main categories of information in your credit report are:
- Personally identifiable information
- Credit accounts
- Credit inquiries
- Public records and collections
Your personal information includes your name, address, Social Security Number, date of birth, and employment.
Credit accounts are any accounts you have with lenders, such as a credit card or an auto loan. The report lists when you opened the account, how much you owe, and your credit limit. Most importantly, it shows your payment history and whether you keep your accounts current by making payments on time. An entry might look similar to this, where “x” means current on payments and “-” means no data:
- Account Info
- Account Name
- Account Number
- Account Type Credit Card
- Responsibility Joint with XYZ
- Date Opened 04/20/2009
- 2/21/21, 12:36 PM Annual Credit Report – Experian
- Status Open/Never late.
- Balance $1,234
- Balance Updated 02/12/2022
- Recent Payment $0
- Monthly Payment $50
- Credit Limit $3,000
- Highest Balance $500
- Terms NA
A credit inquiry appears on your credit report when someone checks your credit file. This happens when you attempt to open a new credit account, such as when you apply for a loan or credit card.
On the report, you’ll be able to see who made the inquiry and whether it was hard or soft. An inquiry made when you apply for a new loan is typically known as a hard pull. A soft pull is made when a lender does a credit check for non-lending purposes.
An example of a soft pull would be if you’ve applied for a job and the employer wants to run a credit check to see how you handle your money. Also, credit card companies do soft pulls whenever they send you preapproval notices. For instance, when you check your report, you might see a soft pull entry that looks similar to this:
- American Express
- Inquired on 11/10/2022
- PO Box 981537
- El Paso TX 79998
- (602) 537-8500
Credit bureaus do not view soft pulls as something that will affect your ability to repay debts, so it shouldn’t affect your credit. (When you check your own credit report, that, too, is a soft pull.)
It’s important to note that when the credit bureaus compile your credit history, they check public records to see if there is anything that might be related to credibility. There is only one public record that is supposed to be shown on your credit report — a bankruptcy filing. If you find other publicly available information on the report you should contact the bureau to have it removed.
How do you check it (and why)?
Checking your credit report is much easier than it used to be, thanks to the internet.
All you have to do is go to AnnualCreditReport.com, select the bureau you’d like to request information from, and fill out the appropriate form. Each bureau can verify your identity using questions regarding your credit use and history. Some examples of questions could include confirming a past address or vehicle you’ve owned, choosing a current loan’s monthly payment, or verifying other similar information.
You can choose to request reports from all three major credit bureaus, but the website recommends only choosing all three if you’re about to make a large purchase, because you typically only get one free copy of your credit report per bureau per year. (However, you can currently access your credit report at each of the three agencies once a week for free through December 2023.)
The website will take you to the report you’ve chosen and send you a security code via email or text, depending on the method you choose. When you enter the code, you can view the report from the bureau you chose and download or print it. If you request a report from more than one bureau, the process of answering identity questions, entering codes, and printing repeats until you have all of the reports you wanted to view.
Viewing your reports allows you to ensure there are no mistakes or entries you did not make. You can also see who is making soft pulls on your credit history and see any charges that might be affecting your credit. If you do see anything on your report that looks wrong, you’re given the option to dispute it via an onscreen button.
Unfortunately, your free annual credit report doesn’t typically show you your credit scores. To see this, you can go to any of the three credit bureaus’ websites and pay a fee to access them. For example, Experian can get your three-bureau credit scores and FICO scores.
How often should you check it?
You probably hear that you should only check your credit report to make sure all of the entries are up-to-date and accurate. It’s recommended by most financial professionals to check your credit report at least once a year. However, you might want to check your report more often, especially if you’re trying to build or boost your credit.
More importantly, checking your credit is essential if you want to make sure your information isn’t being used by someone else. Data breaches and information hacks are a regular occurrence because businesses and government agencies store your personal information. If hackers and thieves acquire your personal information, they can use it to create new accounts, and this can damage your credit.
It’s best to establish a frequency that works best for you. If you’re trying to keep a healthy credit score or want to keep an eye out for potential identity theft or fraud, you may want to check your report frequently. However, it doesn’t hurt to only check your credit score a few times a year if you’re confident about your current credit score.
You also may want to keep an eye on your credit score to make sure it’s not dropping. Your credit score can drop for several reasons, including missing a payment on a loan or credit card, applying for a new loan, or having high utilization.
Your score can also drop if you don’t use your credit. This is why some experts recommend using a credit card to pay for everyday expenses like gas or groceries and then paying it off before the payment is due. This shows activity and responsible credit use on your credit report, which can begin to boost your score.
Many banks have online applications that estimate your credit score. It’s important to note that these scores are not your true credit score — they are generally only calculated using the information from one of the credit bureaus. The score may not be an accurate reflection of your true credit score because the one bureau the bank used might not have the same information the other two bureaus have.
You may also be viewing scores that are calculated differently because there are two scoring systems. One is called VantageScore, and the other is called FICO. The two systems use different scoring criteria, which makes the scores different. Many lenders use the FICO score to make their lending decisions.
One system isn’t necessarily better than the other, but FICO assigns percentages to five categories to create your score. VantageScore assigns weights to six categories and labels each category as extremely influential, highly influential, moderately, and so on. So, if you check your score on one of the three bureaus before applying for a loan, you’ll get a score calculated using VantageScore. When you apply with your lender, they will most likely use FICO, which will give you a different score.
Haven Life and your credit
If you’re thinking about your credit score, chances are you’re considering some large and/or long-term financial commitments. If so, you might wonder what happens to those commitments if something happens to you. Unfortunately, any unpaid debts might fall to your loved ones if you were to die before they’re paid off.
One way to mitigate that risk is term life insurance. You can buy a life insurance policy with enough money to cover those expenses in the event of your death, and choose a term length that covers the years where you’re paying them off.
Best of all, you can do so at an affordable rate — often less than you pay for streaming services every month. (Oh, and if you’re wondering, your credit score doesn’t affect what you’ll pay for life insurance. That said, your credit attributes — such as whether you’ve declared bankruptcy — may be a factor.)
For example, a 30-year-old woman in excellent health can buy a 25-year policy worth $500,000 for $20.81. That’s a small price to pay for peace of mind, and you can begin your journey by getting a free online quote today.