How Often Should You Check Your Credit Report?

A credit score is an important measure of an individual’s creditworthiness and is relied upon by many parties. Banks, lenders, car dealers, landlords, and even potential employers may require pulling your credit before proceeding with key steps. Examining how credit scores and reports are used and which information they contain can be helpful to you as a consumer in maintaining a great score and advocating for your rights.

What is a Credit Report?

A credit report is a document that is provided by one of the main credit bureaus. The credit reporting agencies in the US include Experian, Equifax, and TransUnion. You can obtain a report from one of these or a consolidated report that contains data from all three. This document lists an overall credit score for the consumer and details all outstanding debt they have. Reviewing a credit report can provide a thorough snapshot of how a person spends money, how quickly they pay back debt, how much overall debt they are carrying, and if they have recently defaulted on any debt. A credit report review is required in most situations when credit is being extended to an individual. 

What is Contained in a Credit Report?

In addition to a person’s overall credit score, a credit report lists information about all current and past debt carried by the person in question. It also includes information about the person’s current and past residences. Any late payments and collections activities are listed, as well as foreclosures and bankruptcies. Depending on the bankruptcy type, it will appear for seven to ten years, after which it will be removed from the credit report. The credit score listed on the report can vary slightly among credit reporting agencies. 

Why Should You Check Your Credit Report Frequently, and How Often Should You Check Your Credit Report?

A Federal Trade Commission study found that credit report errors are very common: one in five Americans has an error on a credit report. Because a credit report lists all debts, everyone needs to review it at least once a year for items that do not make sense. Experts recommend checking your credit report even more frequently, as often as once every two to three months. Spotting errors and fraudulent activities could help you find identity theft attempts using your name or incorrect billing practices by legitimate vendors. If you spot erroneous or fraudulent items, you can take steps to make corrections to your credit report, which would raise your credit score. A credit score quite literally determines how much you will pay in interest for a loan, be it a mortgage or an auto loan. It can also determine whether you are eligible for certain contracts, such as an apartment lease or even employment. 

How Often Can You Get a Free Credit Report?

Many argue that checking annually is not enough, but consumers are entitled to a copy of their credit report once per year from each agency. You want to be careful when pulling your credit - soft inquiries/pulls are ok to run and re-run, while hard inquiries/pulls can lower your credit score. The recommended approach is to run a soft-pull report three times per year, alternating the credit reporting agencies so that you run each once per year. Each agency issues one report annually free of charge. 

How to Check Your Credit Score 

Checking your credit score is easier than pulling the whole report. Many credit card companies and banks can bring your credit score into your monthly statement and online banking or payment area. Keeping an eye on credit score changes is essential. If you spot a significant drop, you may opt to pull the whole report to assess what is causing the changes. 

How Often Should You Check Your Credit Score?

Checking your credit score every 30 to 60 days is a great idea, and you can also set email alerts with a credit monitoring agency like IDStrong, where they will send an email when a credit score changes. IDStrong credit alerts may help with some forms of identity theft prevention and protection, especially if used together with credit monitoring, which gives users access to regular credit reports and credit score checks. 

What Factors into Your Credit Score?

Five main factors help compute your credit score: 

1. Payment History – do you make on-time payments? If you have late payments, how late were they? Have any accounts been sent to collections for non-payment? 
2. Total Amount Owed – how does your overall debt amount compare to how much you earn? Are you carrying a reasonable amount of debt or stretching yourself too thin? 
3.  Duration of Credit History – how long have you used credit? If you are just starting with your first credit card or loan, your credit score will be lower because you have not had time to build up your creditworthiness yet. 
4. New Credit in Use: Have you recently gotten several new loan products? This could signal cash flow issues. For this reason, it is recommended to hold off applying for credit cards or any other debt while underwriting other debt, such as a mortgage. 
5. Types of Credit in Use – are you using several different credit products? Or are you leaning heavily on one or two?