February 12, 2021

Contributing writer

Reasons you need to check your credit report regularly

Managing your personal finances is extremely important. While it is important to build a budget and live within your means, another important part of your overall financial health is having a good credit score. With a strong credit score, you will be able to qualify for favorable interest rates on mortgages, auto loans, and other types of financing. Unfortunately, many consumers are not aware of what their credit score is. There are several reasons why it is important that you complete a credit check on a regular basis.

Gives insight into current credit standing

One of the most important reasons that you should check your credit on a regular basis is that it will give you insight into your current standing with creditors. When a credit report and score is received, it will provide you with detailed information about your payment history with all of your creditors.

The report and score will also give detail into what is affecting your credit. Some factors that will influence your score can include your past payment history, your outstanding credit utilization on credit cards, and the length of your credit history. Knowing what positively and negatively affects your credit score will help you make different credit decisions moving forward.

Allows you to check for accuracy

While a credit reporting agency will provide a significant amount of information about your past credit history, there is always a chance that some information could be inaccurate. In some cases, this could be due to an error or it could be due to fraud and identity theft. You may also notice that there are accounts that you have paid back on time and as agreed that are not listed on your reports. In either situation, it will give you the chance to call and have incorrect information removed. If the inaccurate information was hurting your score, removing it could lead to an immediate improvement in your overall credit score.

Provides opportunity to have fraudulent information removed

A key reason that you should have your credit report checked is to ensure that you are not a victim of fraud. Identity theft is a growing problem and concern for people all over the country. When you check your credit report, you will be able to see if credit has been applied for or opened in your name. If fraud has occurred, the report will give the necessary contact information to the creditor to ensure you can start the process of having the information removed. If you do identify fraud, it is important to establish a credit freeze, which will prevent others from looking at your report or opening an account in your name.

Ensures you are prepared if you need a loan 

If you have a plan to make a big purchase in the near future, such as a car or a house, you likely will need to take out a loan to finance the purchase of it. Unfortunately, if your score is low you may not be approved for the loan or will have to pay a much higher overall interest rate. Due to the importance of your score, you should make sure that you know what it is before submitting your application. When you check your score and report regularly, you will know that you can apply for a loan with confidence. Further, if there is some negative or inaccurate information on your report, checking your report regularly will provide time to have necessary changes made.

Having a positive credit score is very important and can help you save a considerable amount of money over time through reduced interest rates received from banks. Due to the importance of your credit score, you need to make sure that you check your credit report and score in detail from time to time.