Why You Should Check Your Credit Score Every 3 Months
Those three digits can determine not only whether we get major loans - like a mortgage - but also the interest rate we'll pay. The difference between a high credit score and a lower one could translate to thousands of dollars.
So yes, we have to stay on top of it ... but is this something we should check every day, or do we have a little more leeway?
How often do we need to check?
"We recommend checking a minimum of once per year," advises Eric Adamowsky, co-founder of CreditCardInsider.com. "Most people check their scores quarterly." While the average person might not have the end-date of the fiscal quarter etched into his brain, there is one other four-times-a-year occurrence we can use as a reminder to check: the change in seasons.
"If you're working on rebuilding your credit and need to keep a close eye," adds Adamowsky, "you might want to check once a month. Checking every day is a waste of time. It's really easy to become inundated with numbers and stats, but you need to give it time for the billing period to end and your payments to go through."
What should you look for?
Essentially, you should be evaluating two things:
Your baseline. If you don't know your credit score, it's time to find out. Credit scores range from 300-850, and the higher the number, the better your credit. Generally, a score over 650 is considered good, and over 720 is considered excellent. Once you know your base, you're looking for ...
Change. A point here and a point there isn't cause for concern, but if your score has dropped considerably since the last time you checked, or hasn't changed in response to major financial accomplishments like eliminating your student loans, there might be something amiss with your credit. To check your score, you shouldn't have to pay. Credit Karma, Credit Sesame, and Credit.com all offer scores for free.
Since sites work with different credit bureaus, Adamowsky recommends checking your score from more than one site so you can look for inconsistencies as well as change. "I've seen scores that range 10-40 points across sites," he says. "If your score is within a normal range, it's OK, but if you have one around 750 and one at 500, it might indicate that something is wrong at that agency."
It's important to remember that the scores provided by free sites aren't necessarily the exact scores a lender will see. "These scores should be taken as a generalization," clarifies Adamowsky. In fact, because your scores are constantly changing to reflect credit activity and because each bureau calculates your score a little differently, these generalizations, while not perfect, are usually accurate enough to predict the estimated score provided to a lender.
Where do credit reports come in?
If your score is lower than expected, has decreased considerably or is inconsistent across sites, it may be time to pull your credit report.
A credit report breaks down the factors that go into your score. If you see a red flag in your score or just want to make sure everything is in order, it's a good idea to check your report. There is only one site where you can get it for free: annualcreditreport.com.
While you can check your scores for free as often as you want through the sites listed above, you're legally entitled to one free report from each bureau once per year, and annualcreditreport.com is the only place to access it online.