Details

Here’s what to consider when reviewing your score and report.

Score

• Is my score higher or lower than before?
• Is my score within the same score range (e.g. Bad, Fair, Good, Excellent etc.)?
• If my score has changed more than 15-20 points, do I know why?

Report

• Is the listed personal information still correct?
• Do the accounts, loans, and balances (keep in mind not all recent payments may be reflected) look correct?
• Have there been any unexpected “hard credit inquiries”? (If you haven’t applied for a new loan or credit, there shouldn’t be.)
• Are there any unexpected collections or public record notices?
• Do I need to report an error?

Frequency of Checking

Keeping a constant pulse on your credit score or report isn’t typically needed. While checking it weekly will help you to see what “normal” fluctuations in your score look like, once you have a feel for that, an occasional checkup is all that’s needed. Don’t forget, in most instances, unless you are about to apply for a loan or some other form of credit, your score doesn’t matter all that much.

The primary reasons to check it are A) to make sure there aren’t any obvious errors in your credit report and B) to make sure your score is generally heading in the right direction over time.

Because your score is a snapshot in time and a variety of factors can impact it in the short term, let’s take a brief look at the most common reason for a score fluctuation: your credit utilization percentage. This is the amount of credit you’re using over the total credit available to you. All things being equal, the lower your credit utilization, the better your credit score. So for example, a 5% credit utilization rate is better than a 25% utilization rate. (Typically, utilization rates for those with the best credit scores are less than 10% but shoot for whatever you can and see “Pro Tips” below.)

Example

Let’s walk through an example:

• For simplicity, we’ll assume you have only one source of credit and it’s all on one credit card that has a total credit limit of $25,000.
• You always pay the full amount on your card which is typically around $2,000 for an 8% credit utilization rate ($2,000/$25,000=8%).
• But this month, at the time the credit reporting agency takes its “snapshot”, your balance on that card is $5,000.
• This means your credit utilization is 20% ($5,000/$25,000 = 20% credit utilization).
• So even though you plan to pay this off in full at the end of the month – which would effectively mean your “real” credit utilization is 0% – the credit reporting agency doesn’t know that at the time they take their snapshot. All they know is what they see.
• An increase in your credit utilization from 8% to 20% would likely trigger a drop to your credit score even though nothing has really changed.

This is just one example of why we say to only check your score and report no more than once a month and in most cases, once every two or three is fine too.

Pro Tips

Two Ways to Lower Your Credit Utilization and Improve Your Credit Score

1. Call your credit card company and ask them to raise your credit limit. While this might trigger a hard inquiry, that is only temporary and has a lower impact on your score than your credit utilization rate. And a higher credit limit combined with the same spending will lower your utilization which will improve your score. Typically, for a customer with a good history of responsibly using their credit card, a card company will happy to raise your limit. (But don’t use this as an excuse to charge more!)
2. Pay off your credit card balance twice a month. By paying your credit card balance off twice a month, you are effectively lowering the maximum amount of credit used at that particular moment in time. So if you typically charge $4,000 a month but pay it off in two payments of $2,000 instead of the whole $4,000 all at the end, the maximum amount of credit being used at any given moment would be around $2,000 (assuming equally spaced spending) which would effectively lower your utilization by half.

And don’t forget, you can always lower your utilization by simply charging less on your credit cards.