Would you go for months without checking your bank account balance? Would you ignore reviewing your monthly credit card statement under the assumption that all the charges on it were valid? If you’re like most people, you wouldn’t, and the same thinking applies should apply to your credit history. Why should you check your credit report? Let’s review what’s at stake.
Credit history (i.e., your report) is used to assign your credit score. The score is calculated through a mathematical algorithm, which pulls data from your credit report and generates a three-digit number. Credit scores range from 300 to 850. Persons with scores over 700 are considered to be in good financial standing and rarely are turned down by creditors. Having a 700+ credit score also means getting better interest rates on loans, which can save you tens of thousands on major purchases like a home over time.
Knowing how your credit score can affect your everyday life is a valuable tool
Credit card companies, cell phone service providers, utility companies, landlords, and insurance companies all look at credit scores to determine an applicant’s credit-worthiness. Having a poor credit rating can impact you for decades, if not for the rest of your life.
Credit reports are issued through three major reporting agencies: Equifax, Experian and Transunion. Each agency uses a unique algorithm, or method, to calculate your score, so it’s common to get a different number from each report.
Why consumers should make a habit of annually reviewing their credit reports
Accuracy. While the three credit reporting agencies do their best to collect accurate information on each consumer, they are not infallible. Your report may have inaccurate data that can result in a lower score. If there is another individual with a name similar to yours, it is possible for the credit agencies to confuse their data with yours, and erroneously include information about the other person in your report. You should check your credit report at least once annually, and ideally three times a year, to make sure everything is in order.
Identity Theft. Reviewing your credit report annually is a great way to make sure you are not the victim of identity theft. Credit reports contain accounts opened in your name using your social security number, address and date of birth. It is one of the best ways to find out if someone is using your information to open new accounts and run up debt.
Loan Worthiness. If you are about to attempt to secure a loan for a large purchase, such as a home or a car, it is a good idea to check your credit report prior to applying. Not only will it allow you to see what the lender is seeing prior to approving/rejecting your loan application, but it also will give you the opportunity to make sure all data is correct prior to someone else viewing it.
Consider Scorewell as your personal concierge in full credit repair and your coach on credit education. Our team’s expertise and electronic disputing technology have successfully removed every form of negative credit including bankruptcies, tax liens, judgments, foreclosures, and repossessions. Contact us for a free consultation.