Our culture is increasingly becoming aware of the importance of credit, and of maintaining a good credit history. However, some still do not check their credit reports. They think that it is pointless, unless they actually plan to borrow a large sum of money.
Your credit history is about more than just trying to get approved for a mortgage. And checking your credit report regularly can have some very real benefits:
1. Identify Inaccuracies
First of all, it’s important to get mistakes on your credit report corrected. Checking your credit report regularly can help you find mistake, and then fix the errors. Errors on your report can result in being denied a loan, or in paying a higher interest rate. Additionally, it’s possible that you could pay more insurance because a mistake on your credit report is negatively affecting your credit score. Look through your credit report for mistakes, and then fix them.
2. Warning of Identity Theft
Sometimes, identity theft isn’t as obvious as finding fraudulent charges on your credit card statement. In some cases, an identity thief will open a new loan in your name. You might not even realize that the loan has been opened using your Social Security number and name unless you check your credit report. Regularly checking your credit report can help you catch fraudulent accounts opened in your name that can affect your credit report. Once you have identified fraudulent accounts, you can begin taking steps to offset the effects of the identity theft.
3. Time to Get Your Finances in Order
You want to regularly check your credit report in order to get a feel for your financial and credit situation. Checking your report can also help give you advance warning, in the event of a problem with your credit or finances. If you know that you will make a major purchase using credit (such as a mortgage), then checking your credit report is a good idea. If you check your credit ahead of time, you will be able to make changes to your financial habits that can boost your credit score.
Even if you aren’t planning to apply for a loan, it can be a good idea to check your credit report regularly. You will get a feel for how financial services providers see you, and you can keep your credit in good shape so that you are prepared for any scrutiny of your record, whether it’s for setting insurance premiums, getting a loan, or being approved by a new landlord.
Your credit report contains valuable information that is widely used to judge your financial health. It can also provide you clues as to how you spend your money — and whether or not your identity has been stolen. You are entitled to one free report each year from each of the credit bureaus. You can access your free reports on annualcreditreport.com. You can either space them out, so that you get one from each bureau every four months, or you can pay to have other copies delivered to you throughout the year.