A credit report is very important piece of financial information for the majority of adults across the United States. A credit report and credit score are used by many different companies to determine your level of responsibility and credit worthiness. There are a number of different reasons why every person should check their credit report regularly but these three reasons are the most important to your financial future.
1. To Review Your Credit Profile
The first reason that you should review your credit report regularly is so that you know your credit score and what blemishes are on your credit report before applying for additional credit or attempting to make a major purchase that may require financing. Knowing the strength of your credit before allowing a lender to access your credit history will reduce the risk that you will get an unpleasant surprise when you apply for the loan or credit card. Reviewing your credit report to determine the strength of your credit before attempting to make a major purchase will also make sure that you do not waste your time shopping for an item that you will not be able to purchase.
2. To Detect Identity Theft
Another reason that you should check your credit report regularly is to ensure that you have not become a victim of identity theft. Cases of identity theft have increased dramatically over the last ten years as criminals gain easy access to personal information because of the increased popularity of purchasing items with credit cards over the internet. There are a number of different ways that your credit card information or identity can be stolen and the theft of this information can be financially devastating to any person that becomes a victim.
To find out whether you have become a victim of identity theft, the credit report should be reviewed carefully for any accounts that you did not open or unpaid bills on your account that should not be there. If there are any issues with the information on the credit report, you should contact the creditor and the credit bureau immediately to let them know about the problem. It is important that any fraudulent accounts be closed quickly to limit the amount of damage that is done to your credit history and credit score.
3. To Check For Mistakes
Another reason that people should check their credit report regularly is because creditors often make mistakes when it comes to reporting information to the three major credit bureaus. As much as everyone would like the credit reporting system to be 100% accurate and foolproof, the truth is that nearly 25% of the people that have a credit history have incorrect information on their record. The negative information that may be found to be incorrect may include credit limits, late payments, missed payments, account balances, or charged off payments.
When the credit bureau is informed about any mistakes on a credit report, they are legally required to investigate the matter and correct the information that they find to be inaccurate. Typically, the credit bureaus require notification in writing with any relevant information included so that they have the information available to make their determination. After they have reviewed all of the information obtained during their search, they will inform you of their decision in writing by mail. Because incorrect information on a credit report can dramatically reduce your credit score, it is important to get any inaccuracies corrected as soon as possible.