Your credit report will be seen by a lot of different people in your lifetime. Every time that you apply for a loan or a credit card someone will be pulling your file to take a look at your score.
The report isn’t only for lenders, however, it’s for you. This is a personal reflection of how you are able to manage your money that can be shared with others. It’s ultimately your responsibility to stay on top of it to make sure that it shows the right information. If you don’t, anything can happen with your credit report ranging from identity theft to simple mistakes made by credit bureau employees that are inputting data.
Below you’ll find the most important reasons why you should check your credit score on a regular basis.
1. Catch Identity Theft Early
When somebody steals your identity and uses it for fraudulent purposes it’s a personal attack that can leave you feeling victimized. It’s absolutely horrible to feel this way. It’s the same type of sensation you would feel if you walked in your front door and saw that your personal belongings had been gone through and that somebody had made off with your most prized possessions.
When identity theft occurs it needs to be handled quickly. There’s no way of telling what type of fraud will be committed next. If someone has gotten a hold of your credit card information, for example, and has used it to order things over the Internet, he may also have access to your banking information.
You just don’t know and that’s one of the scariest parts of it. When you check your credit score and see any signs of suspicious behavior you can take action immediately by contacting your bank or credit card company.
The sooner you realize that you have become a victim of identity fraud the more chance there is of catching the bad guys. Sometimes it’s almost impossible to figure out how your information was stolen but at other times it can be simple.
If, for example, you only used your card at one establishment during the last six months and then right after that there were suspicious transactions happening on your card, the police will know that they should start their investigation at that establishment. It always feels good to catch the person who has violated you personally.
2. Find Any Mistakes before Applying for a Loan
The odds are good that you’ll be applying for a loan or for a credit card in the future. If buying a house is in your plans or a new car, you’ll want your credit score to be squeaky clean before submitting an application.
You’ll have to keep in mind too that it will take some time to correct any mistakes on your credit report. If you look at your credit history the day before applying for a mortgage you won’t have enough time to fix the mistakes. That is why it is so important to always keep on top of your credit history to make sure that everything is in place.
If you have been paying utility bills regularly you probably have firsthand experience with mistakes being made on your bill. If you haven’t experienced it personally then you no doubt know somebody that has. Employees are inputting the numbers into the computer so there is always room for human error.
The same thing occurs at the credit bureau. Employees there are typing in information they receive. As well, at the other end, data is being sent from companies that you are dealing with that may contain an error.
When you take out a car loan for $5000 it could easily be added to your history as $50,000. If a lender looks at your credit score and sees that amount he may simply say that you cannot handle any more credit and turn down your application for a card, a loan or a mortgage. Just one simple mistake can change your credit health in an instant.
3. Monitor Your Progress When Fixing Credit Problems
If you have had credit problems in the past and are currently trying to raise your credit score you’ll need to keep track of the changes that are occurring on your credit history report. In this case you should be requesting a copy of the report 3 to 4 times per year.
It does not damage or influence your credit score at all when you request a copy. Even if you have to pay some money to get the extra copies it will be worth it. It is the simplest way to stay on top of things and to see the results of the actions you are taking. It’s also fantastic to get that special feeling of accomplishment when you have managed to pay down a credit card and you see your credit score go up.
If you are trying to establish credit for the first time you should be taking a look at your credit reports at least twice a year. This will give you a good indication of how well you are doing and whether you should be taking further actions to build up your score.
Your credit score and credit history are a direct indication of how you handle money and how much trust a lender can give you. It’s important to build it up the right way so that you will be able to walk into a mortgage center in the future and have your application approved right away without any hesitation.
Your credit history is not only reflecting your past history with money but will be a big influence on your future financial decisions.
4. It’s Fast, It’s Easy and It’s Free!
It’s easy to order a copy of your credit report online or by phone and it only takes a few minutes to make the request. You won’t have to pay anything for a yearly report so it’s a great free way to keep on top of your financial health.
Since there are 3 different credit bureaus that you can order from, you should order one from each every four months. Not only will you be able to track your information but you’ll also be able to make sure that all 3 reports are the same. If you see any discrepancies you should investigate it right away to find out where they’re coming from.
5. Knowledge Is Power
You can stay in control over your financial well-being by taking action. The more action you take, the more power is in your hands. A credit report is something that you should be able to hand over proudly to lenders and not something that you should fear. When you take a look at your history regularly, you no longer have to be afraid of what could possibly be lurking there.
A lot of people are actually afraid to order a copy of their financial report and avoid it like the plague. The best thing to do, however, is to confront it head on and then handle it as necessary. Knowledge is power and it is only when you have the correct data that you can start to take action to make things better.