3 Times to Check Your Credit Report

When it comes to important financial documents, your credit report is definitely at the top of the list. You actually have three of them, one from each of the major consumer credit bureaus (Experian, TransUnion, and Equifax). You also have multiple credit scores that are calculated based on information in your credit report.

What is a credit report?

A credit report is a record of how you've managed borrowed money, such as personal loans, credit cards, and mortgages. If you've made all your payments on time and paid off, say, an auto loan on time and in full, that'll be reflected on your credit report. If you defaulted on a credit card balance, that'll also be documented there.

Information on your credit report isn't forever, but it does stay for a significant amount of time. In the case of your paid-off car loan, an account that was closed in good standing stays on your report for 10 years. For your credit card default (or late payments and other black marks), it'll be seven years before the credit bureaus are required to remove it.

It's a good idea to review your credit reports at least once a year (and if you were so moved, you could actually check them weekly free of charge for the rest of the year). By taking a little time, you can ensure the information is accurate -- credit report errors are extremely common. In fact, over one-third of those who participated in a Consumer Reports credit report study found errors on theirs. You don't want an error to sink your chance of borrowing affordably. There are a few specific situations that should lead you to pull your credit reports and have a look.

1. Your finances have been compromised

It could happen at any time. You're out shopping and accidentally drop your credit card somewhere. Or maybe you're buying gas and the payment machine at the pump had a "skimmer," meaning your debit card information has been stolen.

Whenever you've lost track of a piece of financial information and are concerned that someone might have access to your bank or credit card accounts, you should keep tabs on your credit report (in addition to notifying the financial institutions involved). If someone is opening accounts in your name, you need to know about it so you can take action.

2. You're about to make a big purchase you're financing

Ready to get a mortgage loan to buy your dream house? If you're about to have your finances scrutinized in a major way (and you can bet a mortgage lender will go through everything with a fine-toothed comb), it's a good idea to get ahead of the situation and check out your credit reports for yourself. If you spot an error, you can ask the credit bureau to remove it. Or if you see a delinquent credit card account that was settled a few years back, you can anticipate being asked about it by your mortgage lender and have an explanation ready to go.

3. You've had a big life change

If you're getting married or divorced, it's also a good idea to check your credit report. Before you combine finances with someone else, get a read on your own financial standing. It's not the most romantic conversation in the world, but bringing your financial skeletons out of the closet and getting on the same page can make for a stronger relationship. And if you're hoping to buy a home or finance another large purchase together, a lender is going to go through your financial information anyway.

Similarly, when you're ending a relationship, checking your credit report could give you a read on any accounts you might hold jointly with the other person. You likely don't want to share finances with someone you're divorcing, so add this task to your to-do list -- and make it a point to close those accounts sooner rather than later.

Reviewing your credit reports is a good way to gauge your financial standing, so if you're facing any of the situations above, take some time and dig into them.