Checking your credit report can help you in many ways. Not only will you always know where you stand as far as your credit is concerned, you’ll always know if there is something incorrect on your credit report.
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All too often mistakes go unnoticed on credit reports. Consumers that don’t check their credit reports regularly have no idea that a late payment was reported that actually wasn’t late or an account was reported in their name that doesn’t belong to them.
But just how often is ‘regularly checking’ your credit report?
The Minimum Frequency to Check Your Credit Report
At a minimum, you should check your credit report once a year. You have access to a free credit report from each of the three bureaus every year. This technically means you get three free credit reports. If you don’t think you’ll remember to check each one throughout the year, pick one date each year and pull all three reports.
This gives you the chance to go over the credit that was reported in your name over the last year. Pay close attention to any negative information as well as the particular accounts reported in your name. Is everything accurate? If it isn’t, you must write to the credit bureau that is reporting the information in order to get it corrected. You’ll need to provide proof that the information is wrong as well as proof of the correct information.
Spreading out the Frequency
You can spread out the frequency that you check your credit reports and still not spend a penny doing it by pulling one of the three reports every four months. If you alternate reports, you’ll have access to free reports for the year.
This gives you a better handle on your credit report and the data reported throughout the year. Because your credit score can change often, it’s a good idea to do this. With more frequent credit report checking, you’ll catch incorrect information faster and will be able to correct your credit score faster.
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Check Your Credit Report Before Applying for a New Loan
If you know you are going to apply for a big loan, such as a mortgage or car loan, you should definitely pull your credit before doing so. Blindly applying for a loan only to find out that you can’t get it can be discouraging. It can also make it harder to get a loan moving forward.
If you check your credit report and find negative information on it, you can correct it before you apply for a loan. Even if the negative information is correct, you don’t want that to be the first thing a potential lender sees. Knowing what you have to correct can help you increase your chances of getting a loan approval.
Checking Your Credit Report Isn’t Checking Your Credit Score
Pulling your credit report doesn’t give you access to your credit score. You’ll either have to pay for a service that does that or you can check with your credit card or bank to see if they offer free access to your credit score, as many do.
Keep in mind that no matter what credit reporting system you use, the score probably won’t be the same score that a mortgage lender sees. They use different systems, which usually means different credit scores. Knowing your estimated credit score can give you an idea of what to expect when the lender pulls your credit. In other words, you won’t have any unpleasant surprises after you apply for the loan.
Keeping a regular eye on your credit report is a good idea even if you aren’t going to apply for credit anytime soon. You need to know what lenders report about your financial habits and to make sure that everything that they report does belong to you. If it doesn’t, it’s up to you to clear up the situation – the credit bureaus aren’t going to investigate unless you make an appeal.
