By Allan Halcrow | American Express Credit Intel Freelance Contributor
7 Min Read | January 29, 2021 in Credit
Start with an annual credit report “checkup,” plus additional checks anytime you plan to make a major financial commitment or decision, or if you want to monitor for fraud and identity theft.
To get a complete picture of your creditworthiness, review reports from all three of the major credit reporting agencies.
Credit reports are readily available for free. They’re also included in many fee-based credit programs.
Should you check your credit report often? The short answer is, “Yes!” But what does “often” mean in this context? Although there is no definitive schedule, a worthy comparison is to consider how often you should visit your doctor. Most of us will make an appointment for our annual physical, but we also go when we have symptoms that concern us or when we want to be sure we’re healthy enough to handle major life events, like having a child or moving to another state. Staying healthy is a powerful motivator.
Staying financially healthy should be, too. Credit reports are the most effective tool we have to monitor our creditworthiness, and they also are a key indicator of our overall financial health. The information they contain can help us make wiser decisions that will save money and build a stronger financial foundation. Therefore, experts suggest you review your credit report in three general scenarios:
Let’s explore how often to check your credit report and how to do it.
There are three major credit reporting agencies in the U.S. – Equifax, Experian, and TransUnion – and each produces proprietary reports. These agencies simply report the data provided to them by creditors. And because creditors decide which data to share and when, it’s very likely that the three reports will be different. In other words, looking at only one or two of your credit reports may not give you a full picture of your credit situation.1
Because the information in your report may determine whether you are approved for a credit card or loan – and possibly whether you can rent an apartment or even get a job – it’s vital that it be accurate. And ultimately, you alone are responsible for ensuring that accuracy. When reviewing each of your three credit reports, pay careful attention to:
The sooner you catch any of these errors or problems the better, so you may choose to review your reports more often than annually – and don’t worry, the idea that checking your credit report hurts your credit score is a credit myth. Experts suggest disputing any errors so they can be corrected, which can be done quickly on each bureau’s website. If you see signs of identity theft, alert the credit reporting agencies as soon as possible.
Besides regular checkups, these additional circumstances warrant reviewing your credit:
Other circumstances that might warrant a credit report check include applying for insurance coverage, opening a new utility account, requesting a new cell phone plan, or pursuing certain investment activities like buying on margin – which is itself a form of credit.
If you now see the value of checking your credit report often, the next logical question is, “How?” Start by requesting all three reports at the same time when you review your credit for the first time or are looking to apply for a mortgage. Otherwise, getting a different one of the three reports every four months may be the most cost-effective way to keep tabs on your credit profile. Here are three guidelines on how to do it.
1. Obtain free annual credit reports: Federal law requires each of the major reporting bureaus to provide a free copy of your credit report once a year. All you have to do is request your reports through www.annualcreditreport.com.2 But take note: Until April 2021, each credit bureau is also offering free weekly reports. Otherwise, you’ll typically be charged for any additional reports you request within a given year – but legally no more than $12.50 per report.3
In addition, credit reports are always freely available for people who meet certain criteria, such as:
2. Use paid services: You can also get copies of your credit report through a variety of paid credit services that also typically offer other options – like credit monitoring or identity theft protection – in various packages. Just keep in mind that they generally don’t offer you all three credit reports, so you’ll want to request additional reports to get a full picture of your credit.
3. Check specialized reports for free: Some parties – including apartment landlords, employers, insurance companies, subprime lenders, utilities, and banks – may request specialized credit reports. You’re entitled to free copies of those reports, too. The Consumer Financial Protection Bureau (CFPB) keeps a list of those reports.4 Experts suggest you review them only when they’re relevant
Since your credit score is a snapshot of your credit health at a particular moment in time, you can check it as often as you’d like. Many financial institutions and credit education websites and apps offer educational credit scores. Your score is typically included on your statement or in the institution’s app, for free. Although this score is not necessarily the same score that lenders see, it can help you get a quick idea of where your credit stands. For more, read “How Often Does a Credit Score Update?”
Credit reports are readily available – often for free – from all three major credit reporting bureaus, so there’s no reason not to review them at least once a year. Doing so can help you catch errors you can correct or identify signs of fraud. Diligent monitoring can help ensure your report, and score, is accurate – and spare you unpleasant surprises when you apply for a credit card, loan, or make any other important financial decision.
1 “Why You Need to Check Your Credit Report With All Three Credit Bureaus,” The Simple Dollar
2 “Annual Credit Report.com,” Experian, TransUnion, and Equifax