Monitoring Your Credit Report
Monitoring Your Credit Report
Why Monitor Your Credit Report?
You’ve probably seen the TV commercials for FreeCreditReport.com that feature a young man singing about the misfortune he’s encountered due to negative information on his credit report. If you’ve ever tried to request a mortgage, auto loan or credit card and run into some of the same stigma that goes along with a bad credit history and a low credit score, you know how frustrating it can be – especially if you weren’t previously aware of the negative information on your report.
While errors on your credit report can exist, many of these uncomfortable situations occur because people simply aren’t aware of what’s on their credit reports. Of course, this is only one of the reasons for monitoring your credit report. Let’s look at this and a few others in more detail:
1. To Know Where You Stand
In these economic conditions, you’ll typically need a credit score of at least 620 to qualify for new credit and a score over 720 to get the the terms. Does your credit score fall in this range? If not, you can take action to improve it before requesting credit by paying down your debt and loan balances and building a good payment history. Since too many inquiries can lower your score, going in knowing that you’ll be approved will prevent these black marks from building up on your credit report.
2. To Protect Against Identity Theft
Identity theft is a major concern for most Americans, and it should be – repairing the damage caused by an identity thief can take years and can cost you thousands of dollars. Generally, the worst situations occur when people aren’t aware that a thief has gotten a hold of their personal information – the sneakiest criminals can open several accounts in your name and run up mountains of debt without you ever knowing it. By monitoring your credit report consistently, you’ll be able to catch any fraudulent behavior and repair the damage before it’s too great.
3. To Catch Errors Early On
According to some experts, up to 80% of Americans may have errors on their credit reports. These errors can be relatively minor – like a misspelled last name or an incorrect address – or they can be much more serious. For example, if one of your creditors mistakenly reports that your debt is in default, your credit score could take a major nosedive.
Fortunately, there is a process for correcting these errors, which involves notifying the credit bureaus in writing with supporting documentation to back up your claim. The downside is that this process can take time. If you’re planning to request a line of credit in the near future, taking the time to check your credit report for mistakes and fix those that you find now will prevent you from being incorrectly declined due to errors.
Obtaining Your Credit Report
The US government allows you to get a free copy of your credit report from each of the three major credit bureaus – Experian, Equifax and Transunion – once a year through the website AnnualCreditReport.com. Most financial experts recommend pulling one report every four months, which gives you ample time to correct any errors you find on each report. Staying on top of the information contained in each of these reports is an important part of protecting your financial future.