Why You Should Check Your Credit Report/Score Regularly?

Credit score and credit reports focus on your credit history and may help you understand your current credit position and your overall financial well-being. So checking your credit reports may help you determine your credit worthiness. It may also help detect any fraud or incomplete information. It may also help you be aware of what lenders may see, in case you apply for a loan. You should check your credit reports at least once every two or three months.

Credit score is a three-digit number that represents your credit worthiness. Your credit history is a summary of how you have managed your credit accounts. Credit report includes your current and past credit accounts, information on your payment history and the amount outstanding on your loans. Credit scores are calculated using information from credit reports.

Benefits Of Checking Your Credit Reports Regularly

Some people do not check their credit scores fearing what they might see while others think that regularly checking the credit reports will impact their credit score. Also some check their credit scores only when they need to apply for a loan thus leaving their score unmonitored for a long duration. On the contrary, following are the benefits of checking the credit reports and scores regularly.

• Track And Build Your Credit Score

You can see the effect of your financial actions on your credit score. You can avoid the actions that negatively impact your score. You can also take proactive measures to maintain a good credit score.

• Identify Inaccurate Or Incomplete Information

An error or inaccurate information may lead to a lower credit score. This could be in form of typographical errors or wrongly reported payment default or mentioning of a loan or credit card which you may have not applied for.

In case of such inaccurate or incomplete information, you should immediately contact the credit bureau as well as your bank to get it rectified.

• Know Better Offers Regarding Loans And Credit Cards

With a good credit score, you are in a position to get loans at a reasonable rate of interest. Also you can avail various rewards and perks associated with a credit card. In case your prevailing loan or credit card is not giving you benefits then with a good credit score you can choose the one which best suits you.

• Helps To Avoid Identity Theft

Identity theft happens when an imposter misuses your Personal Identifiable Information (PII) to conduct a financial transaction or avail financial benefits in your name. A regular check on credit report will help you identify such frauds.

• Keeps Credit Utilization Ratio Under Control

For a good credit score, credit utilization ratio should be below 30%. A regular inspection of reports will help in keeping credit utilization under control.

• Ensure Your Loan/Credit Application Isn’t Rejected

A good score helps you in approving your loan/credit application. In case, you do not have a good score, then you can take proactive measures to improve your score before you apply for loan. This would ensure that your application is not rejected.

When Should You Check Your Credit Report?

Checking your report once every two-three months gives you a thorough insight of your financial activities. If you are not able to check your report frequently, you should do so at least once a year. You should check your report in following cases:

• When you need to apply for a loan. Check report at least three months prior to applying for a loan.
• If you get a notice about data breach
• In case your wallet, credit card or personal information is stolen
• When you have paid off a loan
• When you have opened a mortgage account
• When you see a major swing in your credit score

Conclusion

Checking your credit report regularly is good credit hygiene. Checking your credit score as a soft enquiry does not lower your credit score. Your credit report reflects your credit worthiness and financial well-being. It helps in maintaining a good score, help detect errors and frauds. It also helps in improving financial health and thus achieving your life goals.

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