By: Jeremy Biberdorf
March 10, 2016
Many people tend to lead hectic and busy lives, without paying attention to what their credit history could mean for them. Eventually, when it’s time to apply for a mortgage or a new or used car financing, that’s when the contents of your credit report suddenly becomes important. Many of us admit the importance of good credit reports, yet we tend to ignore the significance of monitoring ours until our loan applications go out.
However, it’s not hard to imagine that if we ignore our credit reports, we can soon expect to have significant issues in the future. This is why it’s vital that you pay more attention to what your credit report shows in order to avoid bigger problems in the future. Looking at the details your credit card holds could help you get a better job, save money on insurance, and possibly buy a home with a lower interest rate, or even get approved at all. Here are four more reasons why it is important that you review your monthly credit reports:
1. Identify Identity Theft
Reviewing your credit reports often can ensure that other accounts that don’t belong to you haven’t been added under your name. If you never check your credit report, you won’t be able to tell if someone has an illegal account under your name or not.
If you see new, unfamiliar accounts opened under your name, especially if they have transactions you don’t recognize, you’re seeing the first signs of possibly identity theft. You should notify the account holders and the credit bureau immediately. You should also alert the authorities, as it’s a crime to open accounts under other people’s names, even if the criminal is paying off the bills.
2. Fix Credit Bureau Errors
Sometimes, credit bureaus may have some information wrong. You could have a similar sounding name to someone who’s lived in your town before, or you could just be the victim of a computer or human mishap. The job of transcribing documents is often still done by humans, who we know make mistakes. Sometimes they could introduce errors in the form of missing numbers or letters. In time, you could see someone else’s information showing up on your credit report and affecting your score.
3. Prepare to Apply for a Mortgage
Preparing to apply for a mortgage means going through a tedious process to get the bank to loan you money. In such a process, your lender will have to review your credit report carefully. Thus, you should review your credit reports long before you decide to submit any application to the lender. If you submit a report with conflicting details about your records, you will increase your odds of being declined. Make sure your records don’t have any errors on them before you submit them.
Your mortgage lender will be able to help you consider what you can realistically be approved for and how much you can afford to spend on a home.
4. Improve Your Financial Health
If you’ve applied for a job and gotten rejected, you may want to look at your credit report. Employers may look at your credit score as a gauge of how responsible you are. Insurance companies do the same thing. Because of a relationship between people with bad credit and people who get into more accidents, car insurance companies will often charge more if your credit score is poor. You may also see an effect on your ability to sign up for utilities without a down payment or even buy a smartphone through financing.
5. Maintaining a Good Credit Report
Going over your credit report can help you ensure it remains in a good state all through the year. In the future, if you decide to apply for a new credit loan, you can simply apply without having to go through the trouble of scanning through your previous credit records all over again. At each stage of applying for a new loan, you can easily monitor your records and recover from any previous issues you may have to encounter.
Whatever the case, going through your credit report a few times per year will give you the advantage of identifying any issue quickly and addressing it promptly.
It’s always advisable to check your credit report twice a year. This is to make sure that all the accounts are reported correctly and there is no fraudulent entry on the report.
I agree with all your reasons for reviewing your credit report often. Identity Theft and Fixing any Credit Bureau Errors being the big two. You can request your free credit report once every 12 months from each of the three consumer reporting agencies, Equifax, Experian and TransUnion. Take turns pulling your report every four months from one of these companies and you would get 3 free credit reports per year.