Checking your credit report is like checking your grades for a class. You want to measure how well you are doing. The last thing you want to happen when you are buying a car or house is to have your loan rejected because of your credit score. By checking your credit score early on and regularly, you can prevent the misuse of your credit information and improve your credit score going forward.
If you read your credit report and find fraudulent spending, then you might be a victim of identity theft. If this happens, set up a fraud alert with the credit bureaus, which will display any future activity that might not be yours. Fraud alert is free of charge and creditors will reach out to you directly about any future fraud attempts.
At times, banks may misreport information about your account to the credit bureaus. This can lead to a decrease in your credit score. When you are applying for a loan or buying a car, your credit score is used to determine if you should be granted a loan. The worst case scenarios of having a faulty credit score include being denied for a loan or receiving a loan that has a higher interest rate than expected. Because it can take about a month for errors to be corrected, it is highly recommended that you check your credit report regularly and submit error corrections as they appear.
Measure Your Credit Score
By knowing what your current credit score is, you will be able to know if you need to focus on improving or maintaining it. Building a better credit score takes time so checking your credit report early on is best. On the other hand, if your credit score is higher than you expected, you can start to seek other credit cards that offer lower interest rates and better rewards.
Checking your credit report on an annual basis is free and can prevent a major headache later on. To get your credit report, request one from one of the major credit bureaus—Equifax, Experian, TransUnion, or Innovis.
In the next lesson, learn more about How to Review A Credit Report.