When, Why & How Often to Check Your Credit Reports

Introduction

Have you checked your credit reports lately?

Even though it’s easy and free to access your credit reports these days, many people don’t know when, why or how often they should check them.

So, let’s explore some situations where you may want to review your credit reports.

Checking Your Credit Reports

Whether it’s in response to something that already happened, or to prepare for something that will happen, there are plenty of scenarios where you may want to check your credit reports.

Luckily, federal law entitles you to one free copy of each of your credit reports from the three credit bureaus — Experian, Equifax and TransUnion — each year. But you can review them weekly at AnnualCreditReport.com.

That wasn’t always the case, but checking your credit reports is easier than ever now. Let’s explore some situations where you might want to do so:

Scenario #1: Before taking out a loan

If you’re planning to take out a car loan, mortgage, or other loan, it’s a good idea to check if your credit is in good standing first.

When you apply for a loan, the lender will likely pull your credit reports and perhaps your credit score. They want to see what’s in your report to assess your credit history, and use your credit score to get a feel for your current credit. If these are in a good place, not only are you more likely to be approved, but you’ll also likely get lower interest rates.

Scenario #2: After a change in your credit situation

It’s also a good idea to check your credit reports after events that may impact your credit. For example, maybe you recently paid off a large loan or credit card balance. Or maybe you recently opened a new account or closed one.

Checking your report after events like this is a good way to be sure that your report reflects the change and that everything is as it should be.

Scenario #3: Before starting a job search

Did you know that in some states, some employers will look at an applicant’s credit report? This is typically a limited version of your credit report and requires your permission.

It may be used for identity verification and can also show how a candidate handles their finances, which, in turn, may reflect honesty, integrity, and other qualities important to that job.

This is more common in specific industries, such as defense, chemical, pharmaceutical, and financial services.

Scenario #4: If you suspect fraud or identity theft

If you have reason to believe that you may have been the victim of fraud, identity theft or other malicious activity, you should check your credit reports for suspicious items like unauthorized accounts or addresses you don’t recognize.

Just remember that checking your credit reports is only one part of your action plan for preventing and protecting yourself from identity theft or fraud in general.

Scenario #5: Regularly, because it’s free to check

We check in with our friends to schedule dinner when we haven’t seen them in a while. We check in with our doctor for peace of mind when something aches or moves a little weird.

In life, it’s generally good to know what’s going on. And the same goes for your credit. Remember, it’s free to check your credit report every week.

You don’t necessarily need to check weekly, but getting into the habit of checking your credit reports on a regular basis can help you be sure that they’re accurate and up to date. It’s also a good way to proactively check for errors in your report or signs of fraud.

Bottom Line

Knowledge is power. And since it’s so easy to check your credit reports these days, it’s also easy to be empowered.

By checking your credit reports before certain life events, or even as a matter of habit, you can avoid surprises and better plan for the life you want.