How Often Should You Check Your Credit Reports?
Mortgage lenders typically offer the lowest rates to borrowers with FICO credit scores of 800 or higher. If your score is lower, you could be locked out from the best possible rate for your next home loan. What can borrowers with lower scores do? The answer lies within your credit reports. Regularly reviewing your credit reports can help you identify and address issues that may be keeping your score down so you can achieve a better mortgage rate.
The Importance of Regular Credit Report Checks
Understanding your credit report is crucial because it details aspects of your credit history, including your payment behavior, outstanding debts, and the length of your credit journey. Regularly checking your credit reports can help you catch errors, prevent identity theft, and monitor your credit health, which are all vital steps towards improving your credit score.
How Often Should You Check Your Credit Reports?
Experts recommend checking your credit reports at least three times a year. This allows you to spot any discrepancies or signs of fraud early. However, some situations may call for more frequent checks:
- Before Major Financial Decisions: Planning to buy a home, car, or apply for a significant loan? Check your credit report several months in advance. This gives you time to correct any errors and improve your score.
- If You’ve Been a Victim of Identity Theft: If your personal information has been compromised, monitoring your credit report more frequently can help you catch any fraudulent activity quickly.
- After Major Financial Changes: If you’ve recently gone through major financial events, such as bankruptcy, divorce, or a job loss, keeping a closer eye on your credit report can help you understand the impact of these events on your credit score.
What to Look for in Your Credit Reports
When you check your credit reports, pay attention to the following:
- Personal Information: Ensure that your name, address, and Social Security number are correct.
- Accounts: Verify that all listed accounts are yours and that the information is accurate.
- Negative Information: Look for late payments, defaults, or other negative marks. If any of this information is incorrect, dispute it with the credit bureau.
- Inquiries: Keep an eye on who has inquired about your credit. Too many hard inquiries in a short time can lower your score.
How to Check Your Credit Reports
You can obtain a free copy of your credit report from each of the three major credit bureaus—Equifax, Experian, and TransUnion—once a year at AnnualCreditReport.com. Staggering your requests every four months allows you to monitor your credit throughout the year.
Improving Your Credit Score
Regularly checking your credit reports is just one part of maintaining and improving your credit score. Here are some additional steps to take:
- Pay Your Bills on Time: Your payment history is a significant factor in your credit score.
- Reduce Debt: Lower your credit card balances and try to keep your credit utilization ratio below 30%.
- Avoid Opening Too Many Accounts at Once: Each new account results in a hard inquiry, which can temporarily lower your score.
- Keep Old Accounts Open: The length of your credit history affects your score, so keeping older accounts open can be beneficial.
In conclusion, regularly checking your credit reports is a proactive way to manage your financial health. It helps you stay informed about your credit status and take necessary steps to improve your score, ultimately opening the door to better mortgage rates and financial opportunities. At First Ohio Home Finance, we encourage you to stay on top of your credit reports to ensure you’re in the best position when it comes time to apply for a mortgage. Speak with one of our expert mortgage bankers to explore your credit scores and how to potentially improve them and begin your free application for a home loan today.
