How Often Should You Check Your Credit Score? Know the Consequences

The credit report serves as a comprehensive overview of the credit activities of an individual. Your credit report also determines your repayment behavior in case of a personal loan. Typically, this score contains vital information, including your credit score, payment history, comprehensive credit account history, personal details, closed accounts, and credit inquiries. You can expect the best results when you hire services from the best personal loan providers. 

Lenders, including banks and financial institutions, depend on these credit reports to understand the creditworthiness of the respective loan application. Therefore, it is important to keep checking your credit report or credit score regularly to be aware of your financial status while taking necessary actions if there is a requirement. 

Checking your credit report regularly will not hurt your score. You can check your credit report and credit score as often as you want. Still, checking your credit score every day, or even weekly or monthly, might not always be necessary. 

You can think of keeping a close eye on your credit report if you wish to improve your credit score or if you want to prepare for some important credit application. You can also consider using credit monitoring services to keep you informed about important changes within your credit report.

Importance of Checking Your Credit Score

Checking your credit score or report quite often helps in the following ways:

1. Knowing Your Standing: When you have a general sense of your credit score, it will help you understand whether or not you qualify for credit cards or new loans. With the knowledge of your score, you will also be able to perceive the term you will receive in case of a personal loan application.

2. Detection of Fraud: In case your credit score is reduced and you are not sure of the reason, you can consider inspecting your credit score thoroughly. Unexpected activities related to your credit account can indicate that someone is using your identity to apply for loans or take credit. 

3. Tracking Your Progress: When you check your credit score regularly, it will help you monitor your overall progress. This helps when you try to improve your credit score.

4. Spotting Credit-related Errors: Usually, credit reports are quite accurate. Still, mistakes can happen. It is recommended to review your credit report regularly for common errors. You can also file a dispute with the creditor or the credit bureau if you find any errors.

You can make use of reliable credit monitoring services to monitor your credit report passively. 

How Often Should You Check Your Credit Report?

You can think of checking your credit report or score quite regularly, like annually. Moreover, it is also recommended to check your score early, when you wish to buy a car or a home, or before submitting important applications. Some general guidelines to follow are:

1. Annually: At the minimum, you should check your credit reports annually. You can think of using a specific annual occasion to set the reminder. For example, you can think of checking your credit report in the first week of every new year. You can also plan it out while filing your taxes or while reviewing your health insurance plan.

2. Months Before Applying for a Personal Loan: Most individuals spend weeks or months shopping for a new car or a home. You can check your credit score early in the process to understand whether or not you qualify for the loan. If you wish to find a better offer, look for ways to improve your credit score easily. 

At the same time, it is also recommended to review your credit report regularly to spot errors or any fraudulent activity. This is because it will take several weeks to rectify your reports.

3. Before Submitting a Rental or Job Application: As a part of the background check, some lenders or landlords might check your credit score. Employers might not receive your credit score directly. Still, you should be prepared beforehand to be aware of potential red flags. Landlords also check your credit score beforehand. You should be in a position to explain in case of a low credit score. 

4. Before applying for a Loan or Credit Card, It is advised to check your credit score again before you submit a credit card or a loan application. A new credit card application will usually entail a hard inquiry. This might hurt your score temporarily, even if you do not get the approval. 

You should aim to pause your application if you feel that your credit score is quite low. Still, you will come across lenders offering a pre-qualification or a pre-approval with the help of soft credit inquiry. 

How Often is the Credit Report Updated?

It appears as if your credit score and the report might be updated constantly in the background. However, this is not the truth! Your credit score is generated on demand. 

Firstly, a credit bureau or platform will create a detailed credit report. Then, multiple scoring models are used for understanding the report when it comes to generating a credit score. The process will start when someone requests your credit score. 

Typically, you will observe a change in your credit score if a change has occurred in the underlying data of the credit report. This will include information about a new account, credit inquiry, or payment. Still, credit scores take into consideration multiple time-related aspects, including the average age of the account. Due to this, time can change your credit score even when everything remains the same. 

Conclusion

It is essential to check your credit report regularly to maintain sound financial health. This strategy will help you be updated about your credit health and the overall creditworthiness. Most credit bureaus and financial institutions offer access to free credit reports. This makes the process of monitoring changes easier and hassle-free.