Here’s why it’s important to stay on top of your credit report.
There are certain tasks in life that need to be done, even if they aren’t the most fun or engaging. For example, we all need to file our taxes, get our cars serviced, and take the time for an annual medical checkup to keep an eye on our health.
But just as you need to fit these tasks into your schedule, it’s also essential to set aside time to check your credit report regularly, ideally three times a year. Here’s why.
1. To keep control of your finances
Your credit report is a snapshot of your financial health to a large extent. Although this report does not tell you how much money you have in savings or how you are doing in your brokerage account, it does will be tell you how you manage your debts.
Specifically, your credit report will include a list of your open credit card accounts and loans, as well as your various balances. It will also show you how much of your available credit you are using at one time so you can see if you have a reasonable amount of debt or not.
2. Be on the lookout for fraud
Nowadays, no one is safe from financial fraud. Even if you follow smart practices to protect your personal information — like shredding sensitive documents rather than throwing them away — a criminal can still get their hands on your credit card or social security number and open a tab on one. of your accounts or open a new one in your name. Regularly checking your credit report could allow you to discover this information as soon as possible and minimize the damage.
Suppose a criminal opens a credit card in your name. If you see this account listed on your credit report and it doesn’t look familiar, you’ll know to take action. But without checking your credit report, you might not discover that account until you start getting non-payment notices in the mail. By then, your credit score might already have taken a hit.
3. To ensure you are in a good position to borrow money
You may be preparing to apply for a mortgage or other large loan for an important purpose. Checking your credit report first will help you determine if now is a good time to apply or if it’s best to clean up your credit history first and then move forward with those plans.
Suppose your credit report indicates that you have two delinquent accounts. This might encourage you to delay your borrowing plans and deal with credit issues first so they don’t get in the way of you getting approved or getting a competitive interest rate.
How to check your credit report
At present you are entitled to one free copy of your credit report each week until April 2022. But normally you can get one free copy per year from every major reporting bureau – Experian, Equifax and Trans Union. You can go to each office’s website and request a free copy of your report there, or visit annualcreditreport.com for a copy of all three reports. It doesn’t matter how you access your credit report as long as you make sure you do it regularly.
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