Checking your credit report may not seem like a necessity, but here’s why you should take the time to do it.
In today’s world, it seems like our to-do lists as adults are never-ending, so the thought of adding one more thing to the list feels daunting (especially if it’s money related).
It’s important to note though, that just as we go to the doctor for an annual physical to make sure that we maintain good physical health, it’s vital to do a financial checkup to make sure that we have ideal financial health.
One of the best ways to achieve that is by checking your credit report annually. Once a year, you can go to www.annualcreditreport.com to see your report. Since you’re only allowed to check it once a year, it’s important that you save it as a PDF file so that you have it for future reference.
(As an aside, it’s important to note that most major credit reporting companies are allowing consumers to check their credit report on a weekly basis during COVID-19 to prevent fraud and to assess their financial situation.)
Here are four good reasons to check it:
1.) To be on the lookout for identity theft.
In a matter of minutes, someone can turn your whole world upside down by stealing your credit card number, social security number, or routing and checking account number. Hacking into online accounts and stealing mail are the most common ways that financial information is stolen.
One way to know if this has happened is to check your credit scores regularly. If they have dropped significantly, it’s important to look at your detailed report to see if credit cards or even mortgages have been open under your name.
If that’s the case, it’s imperative to immediately call the those companies to alert them of fraud. One way to catch this right away is to hire a company that specializes in detecting identity theft.
Accurate credit reports are vital to your financial health.
2.) To see why you were denied a loan or a line of credit.
If you go to your bank to apply for a mortgage, personal loan, or credit card, and are then denied, you are allowed to request a copy of your credit report that the bank originally requested from the credit bureau. Seeing the details on your report can help you pinpoint why you were denied.
If your debt-to-credit ratios on your other cards are too high, if you have applied for multiple lines of credit in a short period of time, or if you have had multiple late payments, those are grounds for denial.
3.) To make sure there aren’t any mistakes on your report.
Yes, large credit bureaus makes mistakes! It’s important to look at each account on your report with a fine-tooth comb to make sure that each one of your creditors or lenders has not put incorrect information about your account.
For example, if you know that you have never made a late payment on your car loan, and you see that your lender has reported two late payments or even missing payments, it’s vital to get that rectified immediately.
If you don’t, your credit scores will be negatively impacted, and possibly prevent you from getting approved for a much-needed loan, such as a mortgage. It’s also important to make sure that your account balances are accurate.
If you have an account that has been paid off in full, but your report shows that you still owe, it’s important to make sure that is rectified as well.
You can do this by reporting the incorrect information to the credit reporting company, as well as the lender on that account. It’s good to have your bank statements ready so that you can prove that you made your payment in full and on time.
4.) To understand why you received a judgment or collection letter from a creditor.
If you’re unsure why you are getting a letter from one of your creditors, or if you’re behind on your payments, but you think you owe less than they’re stating, it’s important to review your credit report.
When you do that, be sure to save it so that you can show it to your financial advisor or bankruptcy attorney, as those professionals will need a copy in order to see your entire financial picture.
Checking your credit report may seem like something that’s not important, but if you plan on applying for a line of credit or even renting an apartment, it’s vital to make sure that there aren’t any mistakes on your report and that no one has fraudulently opened accounts under your name.
If your credit report is less than perfect, and it’s due to owing a large amount of money to your creditors that you can’t afford to pay, contact me for a free consultation. I’ll help you determine if you can settle your debts or if a bankruptcy would be in your best interest.
My cell phone number is (502) 425-2593, and you can call me or text me 7 days a week!
All the best,
Tracy L. Hirsch
Need a free consultation? Text or call me at (502) 435-2593!