You’ve probably heard that you should check your credit regularly. But why is that advice given? Before you decide that you don’t really need to check your credit report, here are 4 reasons to take a look on a regular basis:
Prepare for a major purchase or life change
One of the biggest reasons that you should check your credit is in preparation for a major purchase. When you buy a home using a mortgage, the lender wants to verify that you are likely to make your payments. Another major purchase that requires a credit check is a car.
You might even need to prepare your credit ahead of moving into a rental. Many landlords want to see if there are potential red flags that could result in missed payments. Checking your credit ahead of time can be one way to prepare for what’s next.
It also makes sense to prepare for major life changes by checking your credit since there has been a movement toward including non-credit information, like utilities and rent payments, on credit reports. While such measure might be slow in coming, they could still impact you down the road. Pay attention to what is happening with credit reporting in the news so that you know what actions are likely to cause problems.
Identify and fix mistakes
Five percent of consumers have errors that could cost them more in terms of higher interest rates and even higher insurance rates (in some states).
You don’t want to be one of those whose credit reporting mistakes costs more money in the long run. Checking your credit report can help you catch mistakes and have them fixed. Credit reporting agencies are required by law to fix mistakes in a “timely” manner. While credit bureaus don’t have to remove negative and accurate information from your profile, they are supposed to update inaccurate information to provide a better picture of your behavior.
Check your credit report regularly and dispute inaccurate information. This should be done before you apply for credit so that you can avoid a nasty surprise while you’re sitting with the loan officer.
The FBI identifies identity theft as a major threat to many consumers. While you might not be able to prevent identity fraud in all cases, you can watch for signs to attempt to catch it early. Monitor your credit report for fraudulent accounts, which could be a clue that someone is using your name to open new lines of credit. You should also backup your efforts by checking your monthly account statements and checking your online banking for indications that your credit card numbers are being used to make fraudulent purchases.
By checking your credit report regularly, you can catch identity theft early and take steps to head off further problems. The longer identity fraud goes on, the harder it can be to reverse the impacts and avoid future issues.
Better understand your financial situation
Your credit report can also provide you with clues about your current financial situation. This can help you make better decisions about your finances moving forward so that you have the ability to improve your credit situation.
Checking your credit report can also help you understand how those in the financial industry view you. Try looking at your credit report as if you were a lender trying to decide whether or not you are a good risk. Understanding your credit report from that standpoint can provide you with ideas for an action plan to look better for financial industry decision makers.
When to check your credit ?
The good news is that you can check your credit anytime, and it won’t impact your credit score or the information on your credit report. You are entitled to a free credit report every year from each of the three major credit bureaus. Additionally, there are consumer credit sites, like Cibil Consultants, which allow you to look at information related to your credit report anytime. These resources can provide you with the ability to get a general idea of what to expect when you apply for credit, as well as stay on top of your situation. In some cases, consumer credit sites can also alert you to actions you can take to improve your situation and even save money.
While checking your credit report regularly won’t guarantee that you won’t have problems, the reality is that it is a good way to monitor your situation. At the very least, you can prepare for the most important purchases you plan to make ahead of time.
Source-Secondary
Many consumers look at their credit scores and are at a loss for what to do next. Since a credit score is the reduction of your entire credit history to three digits, it’s hard to really see what is happening to get your score to this point. You might see that you have a low score or a high score, but what does that mean for you and your finances? How can you go behind the credit score to get a better idea of what you can do to improve the situation?
“The first thing beyond the credit score is a person’s credit report,”
Your credit report and clues about your credit score
It’s the information in your credit report that is used to determine your credit score. Credit scoring models assign numeric values to the information in your credit report and use an algorithm to figure out what your three-digit score will be. But the process isn’t even that straightforward. “You have different credit scores,”
Each of the credit reports from the different credit reporting agencies is used in the creation of credit scores, and that means that differing information between credit reports can result in different scores. Plus, individual lenders might use their own modifications of scoring models, emphasizing different aspects of your situation, depending on the loan you are getting.
As a result, your first step is to dig into your credit report to make sure the information listed is correct. If there are any errors, you should dispute them. In 2012, the FTC released a report indicating that about 26 percent of consumers have a “potentially material” error about information often used to generate credit scores. You can call CIBIL Consultants to get your free credit report and score, or use to pull a free credit report from each of the major bureaus once a year.
Once you have your credit report, you can begin looking at information to help you see where you might be weak. Fix errors on your report, identify problem areas, and begin to move forward.credit score
Consumer credit sites and in-depth help with your credit score
Sometimes, even after you get a copy of your credit report, it’s hard to identify what items are causing you problems, and how each part of your report impacts your credit score. Getting beyond your credit score to see what actions you can take to improve your situation sometimes requires guidance. This is where consumer credit sites can help.
Consumer credit sites make it a point to analyze your score, breaking it down in plain terms for you. If you have a low score, a consumer credit site can tell you exactly why they makes use of “reason codes” that identify specific factors impacting your score. The explanations of these reason codes can provide you with greater insight into how your score is figured, and help you see exactly which of your behaviors are contributing to a score that might not be quite as high as you would like.
Not only do many consumer credit sites offer you information about the “why” behind your credit score, but many also provide you with concrete steps you can take to improve your credit situation. You can receive helpful strategies for improving your credit score specifically, and improving your finances overall. With helpful insight and guidance in creating an action plan, your credit score becomes more than just a number; it becomes a way for you to confront the realities of your situation and make lasting changes to the way you manage money. This can save you money on all sorts of financial services, from loans to insurance.
Your credit score gives lenders and others in the financial services industry a way to make snap judgments about you, and the way you are likely to handle credit (and, by extension, your finances). However, this doesn’t mean that you can’t dig into your score and figure out how to improve it so that you put your best foot forward.
''Remember that a credit score is dynamic.A bad one can be improved in a short amount of time. A good can be lowered in the same short amount of time."
The right resources, and an understanding of what goes on behind the scenes of your credit score, can help you stay on top of the situation and build a credit reputation that ensures you the best loan rates and other good financial deals.
Visit- www.cibilconsultants.com
Source : Secondary
