When was the last time you checked your credit score? Can you remember, or was it so long ago that it has slipped your mind?
While there’s no good reason to check your credit score every day of the week, you should get into the habit of doing so regularly. Generally, twice a year is more than enough to stay informed.
Here are some of the many times you should check your credit score (even if you’re not scheduled to do so):
1. You Were Denied a Loan
There are many reasons why you may be denied for a loan, and a low credit score is one of them. So, should this happen, you’ll want to check your score to see how it stacks up.
Here’s an interesting excerpt from the Experian website:
For a score with a range between 300-850, a credit score of 700 or above is generally considered good. A score of 800 or above on the same range is considered to be excellent. Most credit scores fall between 600 and 750.
The closer your score is to 850, the better chance you have of obtaining a loan. If you check your score and realize it’s not nearly as high as you thought, it’s time to investigate. There could be many reasons for this, such as an error on your credit report or fraudulent accounts opened in your name.
2. You Have Plans to Apply for a Loan
Maybe you’re in the market for a new home. Or maybe you’re buying a new car. Perhaps you want to apply for a credit card, personal loan, or home equity loan.
Regardless of what type of loan you’re seeking, lenders will take a strong look at your credit report and score. This gives them a basic idea of your level of financial responsibility.
It’s best to check your credit score as far in advance as possible, as this gives you time to adjust accordingly. For instance, if you find that your score isn’t in the good or excellent range, you may want to put off your application for the time being.
3. You Want to Save Money
The higher your credit score, the more likely you are to be eligible for the lowest possible interest rate. And over the course of a loan, this can save you hundreds or even thousands of dollars.
Take for example a $25,000 car loan at 3.11 percent for 72 months. This works out to a monthly payment of $381.
Now, let’s take a look at what happens if the rate jumps from 3.11 percent to 6.11 percent. This results in a payment of $416.
It doesn’t look like a lot of money on paper, but do the math. The lower rate saves you $35/month and $2,520 over the life of your loan.
Keeping a close eye on your credit score allows you to take steps to maintain its good standing, which can save you big money in the long run.
Final Thoughts
Make it a habit to check your credit score once or twice a year (or more often if needed). This allows you to closely monitor it for changes, which can have a big effect on your finances as a whole.
