Why You Should Check Your Credit Score Regularly
If you’re like most people, you probably don’t think about your credit score unless you’re getting ready to apply for a credit card or loan. There are even people who've never checked their credit scores! It's easy to neglect your credit score. It's not one of those "in your face" numbers, like your checking account or credit card balance. Some people avoid checking their credit scores because they’re afraid of what they’ll find when they look. And some have a misconception that checking their credit score will affect their credit.
Fortunately, as long as you use a credit scoring service to check your credit score, your credit won’t be impacted.
Seven Reasons to Check Your Credit Score Regularly
Going without checking your credit score, or checking it every few years, isn't enough. To have control over your credit and your financial life, you must check your credit score regularly. Here are a few reasons why.
- Know where you stand. Your credit score is an important part of your total financial health. Ignoring your credit score would be just as detrimental as ignoring any part of your physical health. Whether it’s good or bad, it’s better to know your credit score than to have no idea where your credit stands. The good news is that even if your score is bad, you can take steps to improve it. Or, if your credit score is good, you can focus on maintaining it.
- Keep your credit in good shape. In school, you could neglect your homework for weeks, then cram for a test and ace it. Credit scores don’t work that way. If you have an application coming up, you can’t get your credit score ready over a few days. Instead, it takes months, years even to build up a good credit history. Monitoring your credit score puts you in control of your credit and makes you more accountable for keeping your credit score at it's best.
- Make sure your credit information accurate. Your credit score is a reflection of the information in your credit report. Checking your credit score can give you an indication as to whether your credit report is accurate. If your credit score is lower than you expect, it could be a sign that your credit report contains errors that need to be disputed with the credit bureaus.
- You won’t be surprised at the outcome of your applications. If you haven’t checked your credit score before putting in an application, you can be blindsided by denials or terms less favorable than you expected. However, knowing where your credit stands prepares you for the possible outcomes—even the less desirable ones.
- Get insight into what actions hurt and help your credit score. As you monitor your credit score, you can tell how your financial actions affect your credit. For example, you can see how paying off a balance or opening a new credit card will affect your credit. Once you know how certain actions affect your credit score, you’ll know what to avoid in advance of a major loan application.
- Respond to changes quickly. Checking your credit score regularly informs you of changes to your credit score much sooner. If your credit score falls, you can use the information in your credit report to figure out what might have caused the change. Then, you can take steps to recover the credit score points you lost.
- Know when you might qualify for better credit card offers. As your credit score improves, you have a better chance of being approved for credit cards with better interest rates, rewards, or other perks. Or, you can use a strong credit score (and better credit card offers) as a bargaining chip to request that your current credit card issuers lower your interest rates. If your credit card issuer won’t agree to lower your rate, consider applying for a 0 percent balance transfer credit card—a better credit score will improve your chances of qualifying.
Where to Check Your Credit Score
There are a number of ways you can check your credit score for free. If you want to monitor your credit score regularly, using a free service is the best way.
Sign up for CreditKarma.com and CreditSesame.com. You’ll be able to view your TransUnion and Experian credit scores regularly.
Your bank may offer a credit monitoring service that provides free updates to one of your credit scores. Check with your bank or credit card issuer to find out what services are available. Or, if your credit card issuer is part of the new FICO Open Access program, you’ll receive a free copy of your FICO score with each statement along with the major factors affecting your score. Credit cards with free FICO scores include Discover, Chase, Bank of America, Barclaycard, Commerce Bank, American Express, First Bankcard, and the Walmart credit card.
You can also purchase your credit score through the major credit bureaus: Equifax, Experian, and TransUnion or through myFICO.com. Each of these businesses offers a credit monitoring service that you can pay for monthly.
How Often Should You Monitor Your Credit Score
Your credit score can change as often as daily, depending on how often the information in your credit report changes. Credit Karma provides you with daily updates to your credit score if you want to track your credit score that often. If you're planning to buy a house or car soon, checking your credit score more often will help you be prepared. Otherwise, monitoring your credit score somewhere between semiannually to monthly is enough.
Remember that your credit score is a number that reflects the information in your credit report at a specific point in time. To change your credit score, you’ll have to change the underlying information on your credit report with good spending and payments habits. Most credit score providers, even the free ones, will provide you with basic details about the factors influencing your credit score. You can use this information to decide what you can do to improve your score.
As you monitor your credit score more often, you'll notice your credit score moving up and down, sometimes as often as daily. Unless your credit score drops considerably and stays there, you don't have to worry about changes to your score.
Also note that your credit scores may be different between different providers, particularly if the underlying credit data is from different credit bureaus. This, too, is a normal part of credit scoring.
Also, remember credit score questions to ask if you're a retiree.