Keeping a close eye on your credit is wise. As a rule, you should aim to review your credit scores and credit reports no less than once a year. More frequent credit checks could be beneficial as well.
Monitoring your credit score could alert you if you’re a victim of fraud or when errors appear on your credit report. A sudden credit score drop might also tip you off about legitimate but problematic credit issues that need your attention.
The guide below will help you understand situations when it’s important to check your credit score and credit reports. You’ll also learn more about whether checking your credit impacts it in a negative way and when updates to your credit scores take place.
Deciding when to check your credit score is a personal decision. But if you’re working to improve a bad credit score or build your credit, you might want to monitor your progress more closely. According to a survey by PYMNTS, 63% of all consumers had checked their credit scores the month prior to being surveyed. However, those with below-average credit scores checked their credit scores more often than people who had higher credit scores.
The health of your credit, whether good or bad, can have a significant impact on your financial life. Good credit tends to make it easier to qualify for financing when you need to borrow money. And healthy credit can also help you save money in the form of lower interest rates and lower fees from lenders and credit card issuers. Good credit scores might even help you qualify for lower insurance premiums and could possibly unlock savings in other ways too.
In light of the many benefits a good credit score can offer you, it’s smart to keep an eye on your credit details. Monitoring your credit reports and credit scores can help you make sure your credit information stays in good shape so it’s ready when you need to use it.
The data on your credit reports can change often. Each time a data furnisher (aka a lender, creditor, credit card issuer, etc.) provides new information about one of your credit obligations to Equifax, TransUnion, or Experian, your credit details adjust. For example, when a credit card issuer sends an update to one of the credit bureaus regarding your account each month, your credit report will change.
Credit scores, however, work in a different way. A credit score is an on-demand product that calculates your credit risk at a specific point in time. There is no data furnisher that updates your credit score. A new score is only generated when you, a lender, or some other entity requests it. (Note: It is possible to request a copy of your credit report without also adding on a credit score that assesses your credit risk level. A credit report and credit score are two separate products.)
Of course, it’s normal for your credit score to adjust over time. If the information on your credit report has changed from the last time your credit score was calculated, you should expect different results the next time you or someone else checks your credit score.
Just as you should visit the doctor at least once a year for an annual exam, it’s essential to review your credit reports and credit scores at least once a year for preventative reasons. Yet there are additional situations that may call for extra credit checks as well.
You may have heard that checking your credit can hurt your credit score. Yet it’s important to understand that checking your own credit score or credit report will never impact you in a negative way.
The only time you have to potentially worry about potential credit score damage from a credit check is when others (e.g., lenders, credit card issuers, etc.) review your credit reports. These types of credit checks are called hard credit inquiries.
Some hard credit inquiries might have a slight negative affect on your credit score. But keep in mind that hard inquiries only remain on your credit report for up to 24 months and FICO Scores only consider them for up to 12 months. Furthermore, if you don’t seek new credit in excess, applying for the occasional new loan or credit card when you need it shouldn’t cause you much trouble in the credit score department.
Hard credit inquiries aren’t worth a specific number of points where your credit score is concerned. That’s not how credit scoring works. Yet according to FICO, most people lose less than five points off their FICO® Score when one additional hard credit inquiry appears on their credit report.
Checking your own credit report and score results in a soft credit inquiry. Soft inquiries cause zero harm to your credit score. As a result, there’s no harm in checking your credit score once a month, or even more often if you desire to do so.
The Fair Credit Reporting Act (FCRA) gives you access to free credit reports from all three credit bureaus—Equifax, TransUnion, and Experian—once every 12 months. (Visit AnnualCreditReport.com to claim your annual freebies.) However, free credit scores are not included as part of these free annual reports.
On a positive note, there are other ways to access your credit scores—for free or a fee.
Although you only have three major credit reports—Equifax, TransUnion, and Experian—lenders use many different types of credit scores to assess risk. Therefore, it can be difficult to know which credit score to check when you’re performing a self credit analysis. You have hundreds of credit scores.
There are different credit score brands. FICO® and VantageScore® are the two most well-known developers of credit scores in the United States. And both FICO® and VantageScore® credit multiple types of credit scoring models for general use and specific industries (e.g., mortgage industry, auto industry, credit card industry, etc.).
Not only are there different credit score brands and industry options, FICO® and VantageScore® credit scores each come in different versions. For example, some lenders use FICO® Score 2, FICO® Score 4, FICO® Score 5, FICO® Score 8, FICO® Score 9, FICO® Score 10, etc. FICO® Score 8 is the most widely used credit score at the moment, while FICO® Score 10 and FICO® Score 10T are the newest releases.
Most lenders (90% of top lenders in the United States) use FICO® Scores. So, it can be helpful to check your FICO® Score before you apply for financing since there’s a good chance a lender may review some version of your FICO® Score as well.
Yet it’s also worth noting that VantageScore® usage rose to over 19 billion in 2022. Therefore monitoring your VantageScore® credit scores can certainly be a good use of your time and energy as well.
There are many free ways to review both your credit reports and your credit scores from all three credit bureaus. And since there’s no potential for credit score damage when you review your personal credit information, there’s no good reason for your credit details to remain a mystery.
Michelle Lambright Black is a nationally recognized credit expert with two decades of experience. She is the founder of CreditWriter.com, an online credit education resource and community that helps busy moms learn how to build good credit and a strong financial plan that they can leverage to their advantage. Michelle's work has been published thousands of times by FICO, Experian, Forbes, Bankrate, MarketWatch, Parents, U.S. News & World Report, and many other outlets. You can connect with Michelle on Twitter (@MichelleLBlack) and Instagram (@CreditWriter).
Our goal at Self is to provide readers with current and unbiased information on credit, financial health, and related topics. This content is based on research and other related articles from trusted sources. All content at Self is written by experienced contributors in the finance industry and reviewed by an accredited person(s).
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