If the concept of checking your ‘credit report’ seems alien to you, you are not alone. This is because most people do not make this part of their annual routine. Therefore, why should you check your credit report and what is the importance of doing so? The answer has a number of dimensions, however in a nutshell it gives you some control over how attractive you are to a potential lender (i.e. a credit card company) or a service provider like a utility company.
Let’s take a closer look at the reasons behind this.
Your credit report is available from a credit bureau (otherwise known as consumer reporting agency (CRA)) — Equifax, TransUnion, Innovis and Experian. The Fair Credit Reporting Act (FCRA) was established so that you are legally permitted to access your credit report for free, once a year from any of these sources.
Once you have obtained your credit report you should essentially be able to see your financial life story (i.e. all of your bank accounts, credit cards, balances, transactions, previous addresses, bankruptcies, etc). You need to analyze the report to identify any inaccuracies. According to Bankrate, 70% of credit reports contain inaccuracies which might affect your power as a borrower. You should look out for the following factors:
- Is all of your personal information correct (i.e. you relationship status, etc.)?
- Incorrect financial information. Are there any credit cards listed which you have closed down? Have you increased or reduced your credit limit?
- Duplicate mortgage accounts. Have you have amended your mortgage (sometimes it can look as though you have two mortgages)?
- Any anomalies (accounts which appear or do not appear when you know otherwise).
- Outdated issues (paid balances showing that they have not been paid off).
- Any signs of identity fraud
If you discover any inaccuracies within the report, you must contact the credit bureau immediately to rectify.
There are many reasons that you should take action because the information your credit report affects your ability to obtain a loan. It may also affect the interest that you will be charged on the loan. Yes, you will be charged a higher interest rate if you have a poor credit report.
It is imperative that you check your credit report once a year. This is to give you the opportunity to resolve any potential inaccuracies displayed within the report. You must do this to ensure that you give yourself the best possible chance of being accepted for any credit or service provider that you wish. Also, it will help to ensure that you receive the most competitive interest rates on any type of borrowing that you request.
Laura Susstance is a content writer from the UK. When not writing on a freelance basis or writing guest blog posts, she regularly writes on her own blog: FastPayDayLoansReview.com.
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