Too Few Consumers Check Credit Reports
Your credit reports are a detailed summary of where your stand and how your creditworthiness will be evaluated. The information in your file will determine your eligibility for loans, whether you obtain competitive interest rates, your ability to get a job, your auto insurance rates and perhaps even whether you qualify for your dream apartment.
Given the importance of your credit profile, you would think that everyone checks their report regularly. However, this is not the case. Although Americans are entitled to their free annual credit reports from the leading three credit bureaus – Experian, Equifax and TransUnion – many consumers fail to obtain copies of their file and lack knowledge about their credit standing.
In a recent poll of Massachusetts residents alone, 75 percent of respondents said they were aware that Americans are permitted to obtain free copies of their credit scores once every year, the Boston Globe reports. However, only 52 percent actually take advantage of this opportunity to measure their credit health.
Importance of Checking Your Credit
The information in your credit report can be revealing, and may prompt you to engage in better credit management practices. For example, if you obtain a copy of your credit score and find that it could use improvement, your credit report may enlighten you as to the reason. You may find that there is an inaccuracy on your file that is dragging down your credit score, such as a falsely listed account in collections or incorrect balances.
Your credit report also provides a snapshot of your various revolving credit balances. Revolving credit balances refer to credits cards, including traditional cards, retail and gas cards. You may find that your overall revolving debt balance versus your available credit limit across all cards is too high, and may be the cause of your falling credit score.
Most importantly, however, is that your credit report can alert you to fraudulent activity and possible cases of identity theft which can haunt your credit score for years to come, according to the Better Business Bureau. Criminals who gain access to your Social Security number or financial account information can open credit accounts in your name without your knowledge.
In many cases, they will have those bills forwarded to their address and run up balances without paying them. Over time, these accounts will fall into delinquency and the collections calls will begin. However, if you monitor your credit report, you may be able to detect this activity early before significant damage is caused to your report and score.
Many consumers put off checking their credit reports and scores, or assume that because they pay their bills on time each month, they have perfect credit. However, there are several factors that go into good credit and many scenarios that may affect your report, making it crucial to check your file. Evaluating the information in your report for accuracy may only take a matter of minutes, and it can ward off uncertainty and anxiety.