Your credit score is the monumental representation of your financial credibility. With financial institutions and lenders placing significant emphasis on credit scores when evaluating a loan applicant, the health of your credit score can play a major role in your ability to obtain financing for sizable purchases such as a car or a house.
Credit scores are calculated from credit reports, which reveal much more detailed information regarding the specifics of a person's debt obligations and mishaps with credit. Also, your credit report often holds the obvious signs that you've become a victim of identity fraud.
Federal law allows you to obtain one free copy of your credit report every 12 months from each of the three nationwide credit bureaus. By visiting AnnualCreditReport, you can order your free credit reports from either Equifax, Experian or TransUnion. You will have to pay for extra credit reports.
Free Credit Reports: What's The Catch?
The three credit bureaus do not necessarily report the same information for any single person because your credit accounts and inquiries could be reported differently between financial institutions and the credit bureaus. You could opt to receive all three credit reports at once or spread them out over the course of the year.
When To Pull All Credit Reports Together
Because there could be discrepancies between credit reports, it makes sense to request all your credit reports at one time. By doing this, you will receive the most comprehensive overview of your credit history.
The catch here is that you won't be able to check your credit reports for a whole year unless you want to pay for them. Many things can happen in a year, and you don't want to be left in the dark when it comes to your credit.
The most appropriate time to pull all three credit reports together is when you are about to apply for a major loan, such as a mortgage. You will want to catch any errors in your credit report so that you can fix them as soon as possible. This will increase your chances of loan approval and the likelihood of qualifying for a better interest rate.
When to Split Your Credit Reports Throughout The Year
If you choose to order each of your credit reports at 4-month intervals, you will be able to monitor your credit history on a regular basis. On the other hand, you must be aware that there could be information on another credit report (from another credit bureau) that is missing on the credit report that you ordered.
Generally, this approach to retrieving credit reports is more common if you just need to monitor your credit.
No Harm To Your Credit Score
People often believe that it hurts your credit score whenever you pull your credit report. This is false.
Whenever you pull your own credit report, your credit score is not affected. Your credit score is dinged when you give consent to other parties to check your credit. Therefore, you can check your credit without worry of the impact to your credit score.
Monitoring Your Credit On A Monthly Basis
Sometimes, it can be daunting to think that you can only look at your credit report once a year (or three times a year if you spread it out). The credit bureaus may sell subscription plans that allow you to review your credit report every month. These plans can be expensive and often unnecessary. There are other ways to monitor your credit without paying for it.
Check Your Credit Card Perks
More and more credit card companies offer benefits that include free credit scores to their customers. Although these credit scores don't show as much details as credit reports do, they are good for tracking any significant changes to your credit. If you notice a big drop in your score and you're concerned, you can then pull your credit report to see exactly what went wrong. Check if your credit cards offer this perk.
There are various companies that provide free credit-monitoring services. They usually track the credit report with a particular credit bureau and generate a credit score based on that report. Every month, this credit score is updated with the latest information on your credit profile. Again, you can use these free tools as a method of keeping track of your credit.
These popular tools are available from:
- Credit Sesame
Check Credit Reports To Avoid Future Hassles
It is best to keep track of your credit so that you are able to qualify for loans when you need them. You wouldn't want to apply for a mortgage and find out that your credit reports contains some harmful information. You could spend months or years to clear up any errors.
The earlier you can catch mistakes in your credit report, the earlier you can fix them. Even if you just pull your free credit reports once a year, you're still keeping an eye on your credit.