5 Reasons Why You Should Keep up to Date with What is Contained in Your Credit Report

Last Update: February 7, 2021 • Credit Report •

If you’ve ever applied for credit, then the lender will almost certainly have checked your credit report before deciding on your application. If you’ve had an application denied and unsure why you may want to see what is in your credit report. In fact, there are several reasons why you might want to check the details.

For a better idea of why you should keep on top of your credit report, the following explains five reasons why you should periodically check the details.

Your Credit Worthiness is Based on The Information Contained within

One of the main reasons is to see what details might be contained within the report that might affect your credit application. For example, if you’re applying for a credit card, a car loan, a mortgage, or a wide variety of other credit lines, the lender may check your details. You can have a credit check performed by your landlord before renting a place. So, along with credit checks for mortgage applications, the details of your credit report can have a major impact on where you can live.

Before making any loan requests, you should check your credit report so you avoid the risk of any unnecessary nasty surprises. Likewise, any failed applications for credit can impact future applications, so be sure to check beforehand.

You Can Find Errors or Outdated Information

If you have been turned down for credit, it might be the case that there is some erroneous or out-of-date information contained within your file that is encouraging lenders to deny your application. In fact, it is far from uncommon for reports to contain mistakes, so it’s highly advisable to check everything in the report is relevant to you – sometimes mistakes can be made whereby the details of someone with a similar name get recorded under your details.

As well as obvious errors that shouldn’t be there, you may also find outdated information.

One important thing to be aware of is that not all three major credit reporting agencies will necessarily be updated. So, even if one of them looks good, it would be wise to check the others, as well.

Protect Yourself Against Identity Theft

You probably think that you only need to check your credit report for reasons relating to your creditworthiness. Another important reason you might not have considered is identity theft.

If someone has gained access to your personal information, they might have applied credit in your name. This can lead to difficult financial and legal issues while resolving any identity theft consequences.

Ultimately, the faster you identify the issue, the easier it will be to repair it and minimize any negative consequences, including any future issues you might have in obtaining credit. Therefore, you should regularly check to see whether there are any credit applications on your file that you did not make.

You Might Have Difficulties Gaining Employment

Another reason you might want to check your credit report is that any negative details could potentially harm your chances of gaining employment if your potential future employer decides to carry out a credit check.

Your employer might choose to look at your credit report to give them a better understanding of your responsibility when it comes to financial affairs and might decide to turn you down if they see something that suggests you are financially irresponsible.

Alternatively, it’s possible that an employer might notice information that conflicts with some details that you’ve already given them – in which case, whilst they should theoretically seek further clarification, it’s possible that they doubt your honesty and integrity and, as a result of thinking you might have something to hide, they could refuse to hire you. Furthermore, it’s also possible that a potential employer notices some other details that might indicate that you will not necessarily be able to do the job according to the standards required.

Ultimately, with difficult financial times and such great competition in the job market, it’s unwise to allow any unnecessary and preventable reasons to harm your chances of being hired for a job. Therefore, it’s sensible to check your credit report before applying for a position of employment.

The Interest Rate You Pay Can Be Influenced

One final thing to be aware of is that, even if you do get approved for a line of credit, you might find that the details in your credit report influence the rate of interest that you need to pay back for any credit you’re awarded.

For example, suppose you applied for a credit card. However, your credit report was not perfect, but still good enough to encourage a lender to provide you with credit. Then, rather than getting a superior interest rate, you might be offered a product with a higher interest rate, meaning that you might need to pay back more on anything that you borrow.

As a result, even if you are not refused a credit application, this doesn’t mean that everything is fine with your credit report. It might be that there are details that you can do nothing about; however, it might be that errors or out-of-date information are harming your chances of getting more favorable credit.