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Checking Your Credit Report

When it comes to credit health, most of us don't really give it a lot of thought. That is, until we decide that we would like to purchase a home or a car, then it becomes extremely important! Regular monitoring of your credit report can prevent unexpected, and sometimes unpleasant, surprises when you apply for credit.

With online credit reports readily available, and numerous paid services that will keep a watchful eye for suspicious activity in your credit file, monitoring your credit has become much easier than in the past. TransUnion, Equifax and Experian are the three major credit bureaus in the U.S. Each company now offers consumers one free copy of their credit report per year so be sure to order yours.

Ordering your credit report can be done online in just a few minutes, or with a simple phone call to each credit bureau. By reviewing your credit report, you will be alerted to any inaccuracies, unfamiliar or fraudulent activity. This will allow you to get it corrected before you apply for a credit card or loan. It is estimated that at least 25 percent of credit reports contain errors. This alone should be reason enough to check yours!

Next, make a list of all your debt obligations and the interest you’re charged for each. And once you’ve done all that, you’re ready to start lightening your load.

The basics of debt reduction are simple but are sometimes hard to follow-through. But if you are determined to be in charge of your finances, cut down on your variable spending and put the extra money toward your debt payments. Once you determine the maximum amount you can pay off each month, pay down the debt with the highest interest rate first - that usually means your credit-card balance - while paying at least the minimum monthly amount due on all other revolving bills.

Your credit report should be reviewed at least once per year, more often if you are planning a major purchase in the near future. This will help to keep your credit in tiptop shape.

The following are a few reasons to regularly check your credit report:

You Are Declined For Credit

You may want to consolidate credit card debt, but errors on your credit report could prevent you from being approved for a consolidation loan. They can also cause your application to be declined when applying for a credit card or any other type of credit. If this happens, you are legally entitled to a free copy of your credit report from the credit bureau used in the evaluation. This is especially important if you have not recently applied for credit, have no past due accounts or any negative entries that you are aware of. A denial of credit may indicate fraudulent activity, or that there are errors in your credit report.

Getting ready for a Large Purchase

Whether it is time to replace your old, road weary car, or upgrade to a larger home, you will probably borrow at least a portion of the purchase price. If this is the case, don't wait until a week before you are ready to apply for credit to review your credit report. Instead, start a few months in advance. This way, if you find any inaccuracies, you will have adequate time to get them corrected. Even a small item can cast your credit worthiness in a bad light with potential lenders!

Credit Reports Are Used for More than Credit

When you apply for a job, you're probably not focusing on making sure that your credit report is accurate. After all, you are looking for work so you can pay off your debts, not to incur more. Don't be so sure...

Many employers now run a credit report on applicants to determine their stability. People with poor credit are viewed as a higher risk to the employer, just as they are to a creditor. By not correcting errors on your credit report, you could end up losing out on your dream job.

Insurance companies also use a person's credit score to determine how much they will charge them for a policy. In theory, the lower the credit score, the higher the risk - and the premiums. By not correcting credit report errors, you could end up paying substantially more for insurance.

Remember, making sure that your credit report is accurate can save you time, money and frustration.

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