Credit reports are like your financial biography, showing your credit history and current credit activities, such as how you’re doing with loan repayments and your credit accounts’ status. It’s important to check your credit report regularly.
Most people have more than one credit report. Credit bureaus, which are companies that collect and keep your financial information, gather data from debt collectors, lenders, credit card companies, and other financial firms.
WHY YOUR CREDIT REPORT MATTERS
Your credit reports are crucial for lenders when deciding whether to approve your credit applications and what terms to offer you. The information in these reports also helps calculate your credit scores. But it’s not just lenders who use your credit reports. Potential employers, utility companies, and landlords might also review these reports. What’s in your credit report can significantly affect your job prospects, living conditions, ability to get loans, and the interest rates you’ll be offered. Despite credit reports being freely available, many adults haven’t checked theirs in a long time.
BENEFITS OF CHECKING YOUR CREDIT REPORT
Here are five benefits of regularly checking your credit reports:
ENSURE ACCURATE AND COMPLETE INFORMATION
By checking your credit report regularly, you can ensure your personal and credit account information is accurate and complete. If you find any errors, contact the reporting company to correct them. If you see suspicious activities, report them immediately as they could indicate fraud.
DISCOVER AND FIX ERRORS
Reviewing your credit reports helps you make sure that creditors are accurately reporting your payment history. An incorrect late payment can seriously harm your credit, especially if you’re building it up. Dispute any mistakes with the creditor or the credit reporting company to fix them.
HELP WITH LOAN APPLICATIONS
If you plan to apply for credit, like a mortgage or an auto loan, checking your credit report beforehand is a smart move. It helps you decide whether to apply now or work on improving your credit first.
KEEP TRACK OF YOUR FINANCES
Your credit report gives you a good look at your financial health. While it doesn’t show your savings or investment accounts, it does show how well you manage your debts.
IT’S FREE
You can get a free copy of your credit report every year from the three major credit bureaus: Equifax, Experian, and TransUnion. Reviewing your credit regularly, even if you’re not borrowing money, is beneficial. Fixing errors or fraudulent accounts can take time, so it’s better to start sooner rather than later.
GET YOUR FREE CREDIT REPORT
You can get your free annual credit reports at annualcreditreport.com, a site authorized by the three main credit bureaus. You can access your report online, by mail, or over the phone. Online access is immediate, while mail or phone requests take about 15 days.
There are also paid services for obtaining your credit report, which often include additional features like credit monitoring and identity theft protection. These services usually provide reports from a few credit bureaus, so you might need more reports for a complete picture of your credit.
FINAL THOUGHTS
Understanding your financial status from a lender’s perspective is key to financial empowerment. Regularly use your right to free credit reports to keep your financial snapshot up to date and accurate. Experian offers a free monthly credit report. Regular checks help you catch errors and signs of fraud, making sure your credit report and score are accurate and avoiding surprises when you need credit the most.
If your credit score isn’t where you want it to be, take steps to improve it.