3 Times It Pays to Keep Close Tabs on Your Credit

Monitoring your credit is always a good idea, but especially in three key circumstances.

Your credit score is one of the most important factors affecting your finances. That's because so many companies rely on it to decide whether to do business with you. As a result, it's generally a good idea to check your credit report and score every few months or so.

But there are certain situations when it's especially important to keep closer tabs on your credit -- which typically means checking it more regularly. Here are three examples of circumstances when checking in on your score and report every few days or weeks can pay off.

1. When you're working on improving your score

You'll definitely want to check in on your credit report and score more often when you're in the process of:

• Paying down debt
• Getting negative information removed from your record
• Taking other steps to boost your credit

Keeping tabs on your score during this time can help you see if your credit-building steps are paying off. And as you see improvements in your credit score over time, you'll be much more motivated to stay the course -- even if debt paydown becomes more difficult over the long haul.

2. When you're about to take out a big loan

If you're about to get a mortgage or another big loan, then it's especially important to make sure your credit report and score are in tip-top shape.

After all, the information on your report and your score will be reviewed carefully by lenders. If there's a problem with your score, it could make a huge difference in whether lenders are willing to give you a loan and what interest rate you will have to pay.

When you're borrowing a lot of money, even a very small difference in the interest rate that you are charged could cost you thousands. You need to make sure that no errors show up on your report and that you aren't making any borrowing moves that reduce your score and result in a more expensive loan. Keeping tabs on your credit can help you to avoid these problems that could cost you for years to come.

3. When you have reason to worry about identity theft

Identity theft can be a major hassle to deal with, especially if thieves open a lot of credit in your name or you end up getting sued by creditors for debts you didn't know you took on.

The sooner you find out about a stolen identity, the more quickly you can take action to get information removed from your credit report and to prevent further misuse of your information.

As a result, if you have been the victim of a data breach or otherwise have reason to suspect your risk of identity theft is higher than normal, you should keep very careful tabs on your credit.

By checking your credit regularly during these key times, you can:

• Get the best rates on loans
• Minimize the damage if you're an identity theft victim
• Make sure you stay motivated in your credit-building strategies

These benefits are well worth taking a few minutes every few days or every few weeks to check in on your credit score and report.