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When it comes to your credit score, many clichés apply no matter how tired they sound. “You snooze you lose” comes to mind as does “Use it or lose it!” When you don’t pay attention to your credit report and score, bad things can happen. “Ignorance is bliss” doesn’t apply here. Most people don’t bother checking their credit report until they need to use it for something and by then, you might be facing a mess. You shouldn’t wait – monitoring your credit should be an ongoing activity.
Aside from maintenance, let’s look at five reasons to check your credit report:
1 - To check for identity theft and fraud
Don’t assume that you would automatically know that you have been the victim of identity theft. In case of a website breach, you might get a notice, but unfortunately, there are lots of other identity theft issues you could miss unless you checked your credit report or got a notice of non-payment and collection on a debt that you didn't even know you owed.
Checking your credit is an early indicator of identity theft or fraud. Look for accounts and collection items you don't recognize. Scammers may use your identity but with a different mailing address, so when the bills and late notices come, it won't be at your house. You might have a debt collection and credit score nightmare you didn't even realize was brewing.
2 - To check for mistakes
Mistakes on credit reports are quite common. They range from minor things like a discrepancy in the date when the account opens or a small error on your mailing address, up to large errors like payments not properly credited or delinquencies you didn’t know about that are tanking your credit score.
When you check your credit report regularly you can correct a small blip before it becomes a big crisis that could drop your credit score. Digging into archived bank and credit records is a hassle. The sooner you notice a mistake, the easier it will be to correct because it's fresh and the records should be on-hand to prove your case.
3 - To prepare for a loan
Often, people don't check their credit report until right before they send off a credit application for a mortgage, vehicle, or a credit card. This is too late. If you're ready to get a mortgage and there are mistakes on your credit file, it could take you several months to rectify the errors. In the meantime, you could lose your dream home.
It's not just errors to look for when preparing a credit application. Verify the credit parameters the lender wants for the optimal interest rate. Then, you can check your credit report and score and see where you're at compared to where you need to be - and have the time to improve your credit score before you submit that all-important application.
4 – To be proactive
Your credit score affects more than just your ability to get credit and finance large purchases. Your credit score can affect:
- Employment opportunities
- Access to rental property
- Getting or keeping a security clearance
- How much you pay for utilities
- Utility deposits
- Rates for auto and homeowners/renter’s insurance
5 – It’s free
You can access your credit report from each of the three credit bureaus once a year for free. However, once a year is a bare minimum to monitor the accuracy of your credit report. Many low-cost monitoring solutions and apps will keep an eye on your credit report for you. They alert you to changes and items of concern.
An affordable monitoring program is money well spent because it could wind up saving you thousands of dollars in interest costs and financial opportunities. You should also check with your credit card company because many offer monitoring alerts at no cost to their customers, but you may need to opt-in to the program to take advantage.
To find out more about improving your credit quickly and easily, check out our Credit Score Keys DVD.