Why You Should Check Your Credit Report
#1 Make sure mistakes aren't hurting your credit.
Reviewing your credit report can help you avoid costly errors. In one recent
study, more than 50% of the credit reports checked contained errors. Other studies
have shown similar results with as high as a 70% error rate. The most common
error occurs when the information of another person, with a similar name or account
number, is recorded in your credit profile.
#2 Track your history of payments.
Potential lenders want to see a history of timely
payments before they’ll
consider offering you a loan or credit. Check your report to see that your payments
are being reported accurately to the credit reporting agency (CRA). A history
of late payments will result in higher interest rates being charged or having
your credit application or a loan denied. Late payments will also lower your
#3 Protect against potential identity theft.
Identity theft has become the fastest growing crime
in our nation. Identity theft complaints jumped 75% from last year according
to a recent Federal Trade Commission report. The monetary loss from identity
theft crimes skyrocketed to a combined $53 billion in 2002! Accounts that appear
on your credit report that weren’t opened by you could be a sign of identity
theft. Report any such occurrences to all three major credit bureaus immediately
and have them place a fraud alert on your account. The three bureaus can be reached
Equifax 800-997-2493 www.equifax.com
TransUnion 800-888-4213 www.transunion.com
Experian 888-397-3742 www.experian.com
#4 Keep your inquiries to a minimum.
Make sure all of the listed inquiries were authorized. If there are unauthorized
inquiries, write to the credit bureau and to the company that made the inquiry
informing them that you did not authorize the inquiry and to remove it from your
credit file. Potential creditors can regard too many inquiries within a short
period of time (30-60 days) as a negative and can result in the refusal to extend
#5 Stay on top of your credit without hurting your credit score.
A credit score, also called a FICO score, is a numerical
grade given to each consumer . Your grade or score is an analysis of your credit
risk based on your credit history. Credit scores range from 300 to 900, and those
with scores in the range of 640 to 700 are considered excellent credit risks.
Those with FICO scores below 500 are considered to have the highest risk of defaulting
on a loan and therefore most lenders won’t even consider them. Consumers
with higher credit scores receive the best rates and terms on credit and loans.
by: James H. Dimmitt