If you’ve ever taken care of a sick child, you’ve probably checked their temperature much more often than you would ordinarily — and you may be using an actual thermometer instead of gently touching a forehead or neck to get a rough idea of whether there’s a fever. But what do you do when the patient is your credit? It’s not as if you can check your credit a few hours after administering the “medicine” to be sure it’s having the desired effect. How do you know what’s prudent and what’s obsessive?
First, it depends on what you mean by credit. If you mean credit reports, the information about you and your payment history, checking annually seems reasonable unless you have a specific reason for reviewing it more often. You are entitled to a free credit report from each of the three major credit reporting agencies, Equifax, Experian and TransUnion. The information used to calculate your credit scores comes from these records, so you’ll want to make sure they’re accurate and that your information is not mixed up with someone else’s. The bureaus do not share information with each other, meaning there can be variations across all three reports, so you’ll want to look at all of them. (If you have never done this before, we suggest getting all three at the same time. After that, some people choose to check them at different intervals — such as one every four months.) If you find mistakes, you can dispute them.
Your credit scores, which help lenders decide whether to extend credit to you and at what interest rate, are calculated from data in your credit reports. Those should be checked at least once a year unless you plan to apply for credit, particularly a car loan or mortgage, if you are working to build or rebuild credit, or for one of the reasons we describe later in this article. In those cases, you’ll want to check about once a month so that you can monitor your scores. For some, that’s as simple as looking at a number on a monthly credit card statement. You can also get free scores from consumer websites (including Credit.com, which offers two scores, updated monthly, that are truly free, in addition to personalized advice on how you can improve your score). Those scores help you see yourself in much the same way lenders do.
If you don’t like what you see at first, you can work to improve your scores. Some monitoring services allow you unlimited access to credit information, so you could theoretically check every day. But that would make it easier to obsess over every point, and scores fluctuate frequently as information gets updated. You’re really looking for trends, not small day-to-day changes. Lenders are well aware that scores change from day to day and that small differences are all but meaningless. (Though they can be meaningful if your score is close to the line on a credit score range, where you would get better terms for a score that is even slightly better). But a score that is comfortably within a given range won’t get you better terms than one that barely makes the cutoff.
Once a month, though, should give you a clear idea about trends. Do be careful to compare the same credit score each time (there are hundreds of different models), and don’t stress about small fluctuations. Beyond that, be sure you understand why your credit score changed if the shift is significant.
Aside from plans to borrow, there are other reasons you may want to monitor your scores monthly. If you think you may be the victim of identity theft or have recently had your personal information compromised in a data breach, keep close tabs on your credit. Same thing if you have recently divorced. If you are in the job market, review your credit because employers sometimes check credit reports as part of the employment process.
If none of those apply, it’s still smart to make sure your credit is healthy — if you’ve ever had to replace a car unexpectedly, you already know that. Plus, sometimes the first sign of identity theft is a credit score that has changed without any obvious explanation. So while it’s not absolutely essential to check your credit every single month, keeping an eye on your credit scores each month can be helpful. Think of it as an early-detection test that can turn up a problem before symptoms appear (and when it’s easier to treat).
This article originally appeared on Credit.com and was written by Gerri Detweiler.