Credit Tip Tuesday #57 Why Checking Your Credit Report Is Important? 6 Reasons You Should Know

Your credit score, the three-digit number, is more vital for your financial condition than you can ever imagine.   

It’s like your security to lenders that shows what type of person you are in terms of financial management.  

So, to have the best low-interest rates, better living conditions, economical rental choices, etc., it is a must to stay on top of your credit score. 

But, that’s possible only if you manage to maintain a good score on your financial history for a long time.  

Now the question arises of how you can manage to stay on top of your credit score to stay ahead in your credit report.  

Simple! By checking your credit report frequently! 

You must be thinking, why do that? Sure, you know all your transactions and payments, then why is it necessary to check your credit report? 

Let’s help you find the answers and all the reasons why you must subscribe for a free Equifax credit report to help improve your credit history: 

Why To Check Your Credit Report? 

Even before going deep down into the reasons why to check it, a credit report, being a freebie, should help the case. 

Yes, you don’t need to spend even a penny to get it so, why don’t you just check it now and then? Not convinced yet? Well, you’ll surely be in a few minutes read.  

1. Find Where You Stand Financially 

You must have heard about the benefits of a good credit score, but what’s the point of all the information when you can’t get the best out of it for yourself?  

Exactly! 

You can only improve your financial conditions only if you know where you stand; good or bad doesn’t matter. 

So the first step is always finding what your score actually is. If it’s bad, you can always make it better, and if it’s already good, you should work on maintaining it. 

2. Helps To Improve Credit Score

The majority of people don’t feel the need to check their score unless they are applying for a loan, buying a house, or making huge purchases for other major necessities. 

And, when they do that, suddenly all their requests are denied, and applications are rejected—wondering why they get their credit reports only to find out that their credit score falls in the poor range. 

Sadly, they learn the financial impact of credit score on their life a little too late.  

So, if you don’t want to end up in that majority, make sure to check your report regularly to keep yourself updated on your credit score. 

Here’s how you can improve it: 

• Avoid spending all of your available credit balance  
• Clear your bills on time and set reminders for the new ones 
• Apply for a low-interest and highly beneficial secured credit card that gives you a chance to build credit and improve your Equifax credit score 
• Limit your new account applications for three to four months
  

3. Avoid Credit Thefts & Frauds 

Identity theft and credit fraud happen when card owners don’t keep them updated with their credit history.  

This way, scammers get a chance to scam, and the time when the account holder realizes it’s too late and the damage has already been done. 

And, credit theft doesn’t have to be a large amount. Like, every month, a scammer scams a few pennies off multiple accounts. 

The account holder doesn’t care much about the little amount. But, if it’s continued for a whole year or so, the sum won’t remain that little. 

So the best decision is to take action for even the smallest unfamiliar deductions and transactions. You can also buy a card with zero fraud liability to help in such cases.   

Bonus: Click to read a detailed guide by CNBC to save yourself from becoming a victim of credit card fraud. 

4. Eliminates Chances Of Errors 

According to the FTC report, one in every four people finds errors in their credit report. 

So imagine if you’re also among those who didn’t check the mistakes, how drastic the effects can be. 

Certain errors are common to sort out, while others are technical and need additional guidance to resolve. 

Here are some of the common yet easy-to-find errors that can be in your credit report:  

• A clerical mistake of the wrong name, ID, address, birth date, account number, etc. 
• Wrong account details like transactions and bills 
• Having multiple unknown accounts under your name in case of credit theft or fraud 
• Your authorized user was mentioned as the account owner by mistake 

Other credit report errors include:  

• Accounts you closed still have a status of ‘open’ 
• Redundant accounts having different names but the same number 
• Wrong payment history; bills you cleared have a status of ‘unpaid’ 
• Incorrect error dispute details  

And so many more credit reporting errors, which you can avoid successfully by regularly taking a thorough look at your credit report. 

5. Know About Your Credit History 

Your credit report shows how you manage debt, which eventually makes your credit history. A good credit report shows every little detail of your account accurately.   

For instance, if you’re expecting an increase in your credit score, but your credit history shows a drop, it’s an alarming sign there’s something wrong with your credit.  

In fact, your credit history is the key that will be used to calculate your FICO score or credit score. In general, your credit history is a sum of the following: 

• Payment History: It shows your missed payments, late payments, on-time deliverables, days after the due date you cleared the payment, and other similar information 
• Credit Debt: The proportion of everything you owe on every account, whether they’re a sum of your loans or a high credit balance 
• Credit Age: Number of your ‘open’ or ‘active’ cards and their credit histories to see how long have you been making your on-time payments 
• Account Types You Own: Complete information of your home, rental, business, retail, installment loans, etc., and the number of credit cards or secured credit cards you own 
• Recent Activity: How many new accounts you have applied for (soft or hard inquiries)  

The better the credit history, the better the chances of having a good score.  

Note that bad credit history will make it difficult for you to get accepted for mortgage loans, business finances, house loans, etc. 

Don’t worry; you can always repair your low credit score and bad credit history with a good secured credit card and slow baby steps. 

6. Learn What’s Wrong With Your Score 

As you’ll start monitoring your credit reports regularly, you’ll learn more about your credit score. 

You’ll find all the loopholes in your credit history and the things that are hurting your overall credit score. 

When you know what financial steps are negatively affecting your credit, you’ll be able to avoid them in the future. In addition, frequent checking of credit reports allows responding to changes sooner.  

For instance, how your credit score fluctuates on opening a new account (Experian) and how one missed payment or late payment can do to your score.  

Then, when you find the problem sooner, you can immediately repair them. 

We’ve been going on that you should check your credit report regularly for a hot minute now.  

Next, the thing is, how are you supposed to do that? 

Sure, it can save you from so many credit errors and frauds, but that’s only possible if you know how to read even the minor details on your credit report. Don’t worry. We gotcha!  

How To Read Credit Report? 

You can get the free credit report annually or weekly, depending on your credit bureaus and credit card company. 

As we mentioned earlier, your credit history or report includes your personal information, negative inquiries, different accounts, and negative marks.  

So let’s look into the details to find how can you read and understand your credit report easily:  

Conclusion  

Your credit report is the financial permit of your loans and debts, and if we say your future home, retail, and business loans actually depend on it, it won’t be wrong.  

So, it’s compulsory to keep it accurate and error-free. But, of course, that’s only possible if you check it regularly.  

It allows you to know your current financial status and find ways to improve it any further. 

It also gives you a chance to find any fault in your account that can harm your credit score.