All things money related invariably cause stress, especially if you are on a tight budget. Think of all the expenses, obligations, and investments you are monitoring daily. Rent, mortgages, groceries, fuel, maintenance, portfolios, monthly budgets, and others all add to the financial pressure cooker. It’s easy to become overwhelmed with these responsibilities, and many of us delay for tomorrow what should be done today. However, there are many reasons not to procrastinate with financial obligations, since there is so much more at stake than meets the eye.
Why are credit reports so important?
For starters, most folks don’t even know that monitoring your credit score is 100% free when you opt for annual credit reports. In the US, the law expressly states that everyone is entitled to a free credit report from each of the 3 US credit bureaus. These include Experian, TransUnion, and Equifax. There is no charge associated with requesting a credit report from these credit bureaus once a year.
Among the many reasons you will want to check your credit report is to pick up on inaccuracies, stay abreast of your credit score, and review any anomalies in your reports. It may come as a surprise that the FTC (Federal Trade Commission) uncovered a startling statistic when it conducted a review of credit reports in 2013. 1 in 5 customers had errors on their credit reports. If you pick up on these errors early, you can certainly prevent a whole lot of damage from taking place to your credit score.
How can you check your credit score?
If you don’t opt for the TransUnion, Equifax or Experian option, there are many other ways for you to check your credit score. Capital One clients can check their credit scores anytime they want, as often as they want. Discover clients can also check their FICO scores 100% free. If you monitor your credit score regularly, you will know if there has been any unauthorized use of your credit cards, any loan applications made in your name, or any identity theft that may have been perpetrated. Oftentimes, a bank will issue a notice called an adverse action if your credit has resulted in a denial for a loan. If this has happened, you will receive a credit report explaining why the loan was denied.
How often should you check your credit report?
Most folks may check their credit reports once a year. Unfortunately, too much can happen in a calendar year and it behooves you to check your credit reports far more frequently than that. According to the NFCC (National Foundation for Credit Counseling), only 34% of citizens and permanent residents in the US checked their credit reports over the past 1 year. This means that more than 6 in 10 people have not checked their credit reports in the past 1 year. It should be remembered that banks, lenders, and other institutions routinely report to credit agencies on a monthly basis. You will certainly want to stay in the loop about how these reports are affecting your credit score.
Are you planning on buying a home?
If you are tired of renting, and who isn’t, you may wish to consider applying for a mortgage. Banks and mortgage companies conduct extensive reviews of your credit history before you get approved for a mortgage. Once you have checked your credit report, you will have a much better understanding of what to expect from the potential lender. The better your credit score, the better the interest rates you will receive. Once you understand your credit profile, you will have a much more accurate understanding of what is affordable to you.