Why Do I Need to Keep up with My Credit Report?

Last Update: February 13, 2021 Credit Report

Your credit report a compilation of a lot of information that indicates how you manage debt. It really contains a lot of information about you and your money management skills. Information you will probably find on your credit report includes things like these.

  • The total amount of debt you owe.
  • How timely you are paying your bills.
  • How often you have had utilities shut off due to non-payment.
  • If you have ever filed for bankruptcy.
  • If you have ever had a foreclosure on the house.
  • If you have had a vehicle repossessed.
  • Work history and where you presently work.
  • Where you live.

All of this information is about you and basically how well you handle your money and debts. Don’t you think you need to know what everyone else knows about your money running skills?

How is My Credit Score Determined?

Your credit rating or credit score is reflected in a single number that lies somewhere in the range between 150 and 900. All of your creditworthiness is rolled up in this one number. There is actually a very complex formula used to compile all the information in your credit file to determine a single score. This one number is like having a solitary picture of what your credit looks like overall.

What Factor Affect My Final Score?

  • Your payment history.
  • How many lines of credit you have open and active.
  • How long each of your credit lines has been opened.
  • When you began developing your credit and how long you’ve had credit information.
  • What types of credit you have (credit cards, loans, medical bills, etc.).
  • How much credit you have available to you, and how much of it you have already used.
  • How many inquiries have been made into your credit information (this occurs when you apply for a line of credit like a new credit card or a loan)?

What Does My Credit File Say?

Everything in your credit report can have a positive, negative, or neutral rating. Negative items on your credit include things like.

  • Overdue accounts.
  • Accounts that have been “charged off” after non-payment (may count against you for 7 years).
  • Bankruptcies (only count against you for 10 years).
  • Applying for a job that pays you at least $75,000 can be negative.
  • Applying for credit or even life insurance of at least $150,000 can have a negative effect.

Things that have a positive influence on your credit report:

  • Making payments on time every time.
  • Not applying for numerous credit lines.
  • Paying off a loan or debt.
  • Not applying for more lines of credit.

How Important is Monitoring Your Credit Report?

Do you realize how many people have legal access to your credit report?

  • Employers.
  • Lenders.
  • Cell phone providers.
  • Insurance companies.
  • Utility providers.

These can all review your credit report and decide about extending your credit or doing business with you based on it. Just because they can review your credit report is a good reason for you to take a look at it periodically.

But why should you care if they can see your credit report?

  • Your credit report is a “wealth-building tool,” and you can use your score to get lower interest on loans.
  • Credit card issuers base the interest rate they offer you on your credit score.
  • Low-interest mortgage rates are still obtainable if your score is good.
  • The FTC (Federal Trade Commission) estimates about 10% to 21% of consumers find and confirm errors on credit reports each year.

You should check your credit score at least once a year. This helps you keep an eye on your own credit score, manage your score better, and correct mistakes if they occur.

When Should You Review Your Credit Report?

As stated above, you should check your credit report at least annually to ensure there are no errors. These can keep you from getting better terms on your credit transactions or loan. Other times you should check your credit report include.

  • Before making a major purchase like a house or car.
  • Before you apply for a new job (some companies check credit histories before hiring an employee.

I know what you are thinking. How does this really help me? Well, there are a couple of very good reasons to check and double-check your credit score. By checking your credit report, you can.

  • Guard yourself against identity theft by finding delinquent payments on accounts you didn’t open.
  • Find and fix any errors that are on your credit report by filing disputes.

You are eligible to receive a free copy of your credit report one time every 12 months. This document will reflect information collected by the three major consumer reporting agencies. Other consumer reporting agencies might also be beneficial to obtain reports from. These types of agencies not only collect information about you, but they may also share it with interested parties. Along with your credit report, try to obtain your records including.

  • Medical records or medical payments.
  • Residential history or tenant history.
  • Employment history.
  • Check writing history.
  • Insurance claims that were made.

Most of these organizations also provide one free report yearly. Some specialty consumer reporting agencies might charge a small fee for you to obtain your credit report.

How Do I Get My Credit Report?

There are three major credit reporting agencies:

  • Experian
  • Equifax
  • TransUnion

Federal laws require these three major agencies to provide consumers with one free copy of their credit report every year. Obtaining your credit report from one or all of these agencies doesn’t influence your credit rating. You can go to their sites online and print out a copy of your credit report to keep in your files. Remember that these agencies do not necessarily share any information between them, so you need to get a report from each of them. It’s the best way to stay on top of your report if any mistakes or signs of identity theft occur.

There are also some other times when these agencies have to give you a free copy of your credit report.

  • If you’ve been a victim of fraud.
  • If you are not employed and are looking for work.
  • If you get turned down for a loan because of the information on your credit report.

It’s important to know what your credit report is saying about you. You also want to know what everyone else is seeing when they request a copy. Stay on top of your credit by always knowing how your credit report is affecting your life.



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