How Often Should You Check Your Credit Score?

A credit score is a numerical summary of an individual’s financial reliability. This three-digit number influences various aspects of financial life, from obtaining loans to securing favorable interest rates. Monitoring this score helps individuals manage personal finances and identify potential issues promptly.

What Your Credit Score Represents

A credit score is a numerical representation of an individual’s creditworthiness, calculated using information from credit reports, reflecting past financial behaviors. Five main categories influence its calculation.

Payment history holds the largest weight, typically accounting for 35% of a score, indicating whether bills are paid on time. The amounts owed, also known as credit utilization, constitutes about 30%, reflecting the proportion of available credit currently being used; a lower utilization rate, ideally below 30%, generally benefits the score. The length of credit history makes up approximately 15%. New credit accounts for about 10%, and the final 10% is based on the credit mix, considering the diversity of credit types.

Distinguishing Credit Score Inquiries

Accessing a credit report results in either a soft or hard inquiry. A soft inquiry occurs when an individual checks their own credit score or for pre-approved offers. These inquiries do not negatively affect a credit score and are often not visible to lenders.

Conversely, a hard inquiry happens when a lender reviews a credit report as part of a formal application for new credit, such as a mortgage, auto loan, or credit card. Hard inquiries can cause a small, temporary dip in a credit score. While they remain on a credit report for up to two years, their impact on the score usually diminishes after a few months.

Methods for Obtaining Your Credit Score

Individuals have several avenues for accessing their credit scores and reports for free. Many credit card companies and banks provide free credit scores to their customers, typically updated monthly and viewable through online portals or mobile applications.

Federal law allows consumers to receive a free copy of their credit report from each of the three major credit bureaus—Equifax, Experian, and TransUnion—once every 12 months through AnnualCreditReport.com. Some online financial platforms also offer free access to credit scores and basic credit monitoring services. Reviewing these resources constitutes a soft inquiry, ensuring no negative impact on the score.

Determining Your Ideal Checking Frequency

For general financial awareness, reviewing your credit score at least once a year is a prudent practice. This annual check helps to monitor overall credit health and detect any unexpected changes.

It is advisable to check your score several months before applying for significant loans, such as a mortgage or auto loan. This allows time to identify and correct any potential issues that could affect loan approval or interest rates. Consider reviewing your credit score more frequently, perhaps quarterly, if actively working to improve it or after major financial events like opening new accounts or paying off substantial debt. The absence of negative impact from personal credit checks means you can monitor your score without concern for damaging it.

Steps After Reviewing Your Credit Score

Upon reviewing your credit score and report, scrutinize the report for inaccuracies or signs of fraudulent activity. If errors are identified, you have the right to dispute them. The dispute process typically involves contacting both the credit bureau that reported the information and the company that furnished it.

You should provide a written explanation of the error, along with any supporting documentation, and mail it to the respective parties. Credit bureaus are generally required to investigate disputes within 30 days. Improving your score involves consistent financial habits, including making all payments on time. Reducing the amounts owed on revolving credit accounts, aiming for credit utilization below 30%, also helps. Maintaining older credit accounts in good standing and limiting new credit applications are additional strategies that can contribute to a stronger credit profile over time.