Your credit score is used in so many ways, from determining your interest rate on loans to pre-qualifying you for automobile and home purchases. Because of that, it's extremely important that you check your credit report on a regular basis and pay attention to all the information your credit report contains.
Your credit report is one of the most important personal finance tools available to you, yet most Americans don't check their credit reports regularly. Either they are afraid of what it has to say or they claim they don't have the time, many people use excuses for why they aren't aware of their current credit situation.
If you're still not sure why you should monitor your credit regularly, here are three reasons why you should check your credit report at least once a year. The three different reporting agencies are Experian, Equifax, and Transunion, and you can access all of them for free online.
Personal Information Errors
While the personal information on your credit report may not directly impact your credit score, it is important to make sure your name, address, and past addresses are all correct because your report could be pulled by a third party.
Occasionally, information from someone else's credit report will show up on your report if you have the same, or similar, names. If any of this information isn't correct, you can easily dispute it from within your online credit report. Most errors in personal information are cleared up within a day or two of you filing the dispute.
Identity theft is a hot topic these days as more instances of identity theft have been reported in the last few years. Thankfully, if you check your credit report, you can usually spot identity theft before it gets out of control. Your credit report is one of the first places identity theft attempts show up as the thieves often try to open new credit accounts in your name. Be on the lookout for unfamiliar credit accounts and incorrect addresses and personal information. If you find an error, dispute it right away.
Save Yourself Money
Checking your credit report can save you money on interest if you are taking out a loan. Loan interest rates are often heavily based on your credit report, and having any negative indicators, like late payments, high balances, or collections, will negatively impact your overall score and raise your interest rates. While this may not seem like a big deal, it can cost you thousands over the life of a long-term loan, and no one likes throwing money down the drain.
As mentioned, if you find an error on your credit report, be sure to dispute it right away, and the credit reporting agency will look into it on your behalf and let you know the results of the investigation. Most errors can successfully be cleared up if you take the time to check your credit report.
Remember, this is one of the most important tools available to you, so be sure to log onto www.annualcreditreport.com regularly and pull one of your three credit reports every 4 months. That way, you can monitor your credit throughout the year and steer clear of any serious identity theft issues.