How Often Should You Check Your Credit Rating?
With the proliferation of free online credit rating services, keeping track of this magic number is easier than ever. But this ease of access creates a new level of temptation for people who are interested in their credit score or looking to improve it.
In addition to accessing every credit bureau’s reports for free, the curious credit user can also create accounts with Credit Karma, Credit Sesame, WalletHub, or NerdWallet to check their account.
Credit Karma is my favorite of the free credit rating sites where I can check my VantageScore. But I also have an account with Credit Sesame. And my bank offers access to my FICO Score account. And at least two of my credit cards offer access to the FICO account as well.
Which means I could BLIP around the internet all day to check who has what score for me. But can checking your credit history too often harm your financial health? Take WalletHub for example: the site claims to be the first site to check for credit rating updates on a daily basis. Convenient! But is it necessary?
“Today we know a lot more about how a credit rating is calculated in general terms,” said Bruce McClary, a spokesman for the National Endowment for Credit Counseling . “But we don’t know the secret sauce. Nobody does that unless they work for appraisal agencies. “
Lenders usually report changes to three credit bureaus once a month, and these dates do not coincide from lender to lender. In addition, not all lenders report to all three credit bureaus. And each of these credit bureaus must also provide updated information to their online partners like CreditKarma and friends.
When you get your credit score, whether it’s a credit bureau, your bank, or an online service, you only get a snapshot of your credit usage, McClary said. The daily fluctuations in the variety of secret sauce can make you stressful if you check your score frequently.
There are times, McClary said, when it’s important to know your result. If you are considering buying a home, thinking about car financing, or considering applying for a credit card or loan, you need to know where you are before contacting a lender. In addition to evaluating: “Monitor the accuracy of the information reported and look for signs of identity theft and credit fraud,” he advised. It can take up to six months for the credit bureau to complete the error investigation process and update your report, he said.
Unless you’re planning a major purchase, a free copy of your credit report at the three bureaus at Annualcreditreport.com may be enough to spot serious problems. Combine that with freezing your credit (it’s free! Do it!) And setting up alerts for your bank and credit cards that provide more accurate information about your credit status than ever-changing daily snapshots.