Are You Checking Your Credit Scores Too Often?

A big part of responsible personal finance is staying on top of your credit. This includes regularly checking your credit reports. It also means keeping an eye on your credit scores. But there’s a fine line between monitoring your credit scores and obsessing over them.

Yes, even with your credit, there can be too much of the good stuff. If you’re someone who logs into a credit score app every other day, maybe it’s time to rethink your approach.

It is important that your credit reports are in good repair. Lenders will check your credit every time you apply for a loan or credit card. You can even undergo a credit check when you apply for utilities or a new cell phone account.

This is why it is important to regularly check your credit reports. You want them to be an accurate representation of your credit history. They must be up to date and free of errors. In most cases, however, you can only check your credit reports for free once a year. By law, you are entitled to a free copy of your credit report from each of the three major credit bureaus.

While you can sign up for various services to monitor your reports more often, they usually cost money or have limited access. This is where your credit scores come in.

Your credit scores are a direct reflection of what’s going on with your credit reports. This makes it a great tool for tracking changes to your credit reports. If you see a sudden increase in your credit scores, you know something has changed in your reports.

Credit scores rise and fall steadily

As great as your credit rating can be, it can also be a source of anxiety. If you obsessively check your scores, every little change can cause an alarm, even if it doesn’t.

Your credit scores are a lot like the tides; they come and go regularly. Small changes of a few points are very common and perfectly normal.

Most small changes in your credit scores are the result of changes in your credit card balances. Credit card issuers typically report your balance information at the end of your statement period. This is usually 20 to 25 days before your due date.

If you have a high balance reported to the bureaus, then your credit score could drop a few points. The higher the balance, the greater the dip. For example, if you splurge on vacation in the summer, you might end up with a higher credit card balance than usual. This will be reported to the bureaus and your credit scores may drop by 5 points.

This is due to the use of your credit. One of the top five factors in determining your credit score, your credit usage is how much of your available credit you use. If you have a credit card with a credit limit of $ 1,000 and a balance of $ 200, you have 20% credit usage ($ 200 ÷ $ 1,000 = 0.2). Ideally, you should aim to keep your usage below 30%.

However, drops in credit scores due to high usage are not necessarily a cause for alarm. Since balances are reported long before your invoice is actually due, it is not permanent. As long as you pay off your card, your credit score will rebound the following month when the lower balance is reported.

Small changes in your credit scores are normal. Big changes are less so. If you are seeing a significant drop in your credit scores, say in the order of 20 points or more, this is when you should be concerned.

A brand new account, maxed out credit card, or late payment are all reasons your credit scores could be seriously affected. All of this reflects a major change in your credit reports and may need to be followed up, especially if you haven’t done anything different lately.

Check your credit scores once a month, not once a day

Overall, you can easily stay on top of your credit scores by tracking them just once a month. As we noted above, issuers tend to report your balances monthly. Even if you have multiple credit bureaus accounts, you can see all updated balances by checking your scores once a month.

If you are truly concerned about your credit, consider setting up credit alerts. Most credit monitoring apps – and even many credit card issuers – will allow you to set email or text alerts that will notify you of any major credit score or credit report changes. That way, you can go about your day-to-day business without obsessing over every little change in your credit scores.