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Your credit report is the touchstone of your financial wellbeing. If it’s flawed or erroneous, you’ll pay more in interest for crucial services like utilities and some insurance coverage, and miss out on certain financial opportunities. Despite the importance of your credit report, many people rarely check it and just hope for the best.
Your credit report drives your credit score which is important to not just your financial opportunities, but perhaps career and housing options as well. It does you a world of good to keep an eye on that all-important report. When should you check it and how often? Here are five times you need to check your credit report.
#1 While trying to improve your score
Trying to improve your credit score without first checking your credit report is like batting blindfolded and hoping for a home run. Without baseline info, you won’t know how to strategize for success. You need to know where you stand so you can decide what to do next. Your credit report gives you information to determine where you’ve not been up to par.
From there, you can see what to avoid and what you need to do to get where you want. Look at the five aspects that make up your score (age of accounts, utilization, payment history, etc.) to see where you can make improvements. Without seeing your credit report, you won’t know how to address deficiencies and improve your score.
#2 If you think you’ve been the victim of identity theft
The first indicators that you’ve been a victim of identity theft could be on your credit report. If you see new credit activity that you didn’t initiate, that’s a sure sign that someone is using your identity to get credit. You can bet they will run up these new accounts and never pay them off, leaving you with a mess to sort and a plummeting credit score.
Of course, if you don’t check your report regularly, it could be months before you know about the fraud. The first indication you may get is a call from a debt collector wanting to know when you intend to start paying up on that debt that came thanks to the identity theft. Monitoring your report is good, but you can also lock down your credit reports if you think you’re at risk.
#3 You want to apply for a loan
Just like you make sure your house is spotless when you know you’re expecting company, you need to tidy up your credit report before you invite potential lenders in to look around. It’s advisable to examine your report well before you apply for the loan - at least six months or more. That gives you enough time to clear up any discrepancies or errors on your report.
The first thing to do is fix mistakes and get incorrectly reported items, fraud, etc., off of your report. From there, you can see how to improve your score to get better terms. Paying down balances or requesting line of credit increases so your utilization is lower (and score can be higher) are all techniques to consider when prepping to apply for a loan.
#4 You were turned down for credit
By law, you’re entitled to a free copy of your credit report after you have been turned down by a potential creditor. When a creditor turns you down, they must send you a letter informing you of their reasons for denying you and how you can obtain a free copy of the report they used to make their decision.
You need to review the report they used so you are sure they didn’t decide because of some misunderstanding that you could fix easily. It may have been a late payment reported in error, some form of fraud, or other circumstance you can clean up then reapply for credit once you rectify the error.
#5 Periodically just to make sure it’s okay
Just as you go to the doctor for a check-up every so often, so too should you look at your credit report periodically to assess its health. At a minimum, you should take a glimpse at your credit report quarterly. Even better, sign up for a free or low-cost monitoring service.
That way, you’ll be notified if new accounts appear on your report, if your score drops or raises, or if there are any negative items added. Checking can give you a heads-up on any issues s you can promptly address them. It’s also a good way to keep a casual eye on your credit if you’re likely to forget to review the report occasionally.
If you want to improve your credit, check out Credit Score Keys today.