Importance of checking credit report regularly

checking credit report

How many times do you check your bank account in a month or a week? We all are versed in technology. We are active in all mobile banking apps. So, we can account for ourselves to be called as diligent. But don’t hold our responsibility ultimately because we don’t check our credit report the same way as we review the bank accounts.

To maintain good financial health, you must check your credit report. A good credit report is directly related to a significant economic life. Also, an option for cibil score check free is available.

A credit report is an estimate of an individual’s creditworthiness as it contains all the information about your personal payment history, i.e., how you pay off your debts and handle your credit. An annual credit report of a person can even be 100 pages long. The banks check your credit report before they approve you for loans and credit cards. It gives them a measure of your ability to repay the borrowed amount. It is a reflection of your financial well being and gives an insight into everything you have done with your credit. By using the credit report, lenders ascertain the lending rates that can be provided to consumers. Observing the credit report will not affect your credit score.

Importance of checking credit report regularly –

The reasons to check your credit report regularly are mentioned in detail below:

  • The credit report may contain inaccuracies – Your credit report gets reflected by your credit score. Periodically checking the report will give you an idea if your report is accurate or not. The credit report contains information about your name, address, how your bills are paid, where you work, etc. It may provide outdated information and a misreported balance. Your credit report contains errors if it is lower than you expected. The errors can be discussed with the credit bureaus. It’s essential to make sure that the information on your credit report is fair and accurate as insurers and creditors evaluate the data. Errors can negatively mark your credit. Credit repair companies have reported that each month, clients have observed an approximate 7% negative information cleared away from their credit report.
  • Maintaining good credit – Regularly reviewing the credit report enables you to observe if you are recuperating from past credit problems. Keeping track of your credit report puts you in control of your credit.
  • Manage your finances – Along with your credit card bills and bank statements, you must evaluate your credit report too. It is a crucial part of your financial condition, and checking the report regularly will give you an idea where you stand. Managing expenses, credit, and savings are essential to have a healthy financial situation. By observing your credit report, you will know how your credit gets affected by your financial actions.
  • Defense against identity theft – Monitoring credit report can prevent you from identity theft. Your credit report contains each financial and personal information, and an identity thief can exploit your finances. Spotting an occurrence of identity theft early will increase the chances to protect extensive damage. Signs of warning on your credit card includes the names you do not identify, unfamiliar names of banks, accounts you didn’t open and hidden social security numbers.
  • Low-interest rates and fees – lenders view your credit report to determine your creditworthiness. Banks will offer you loans at a low rate of interest if you have a good credit report.

What will happen if you don’t review a report on a timely basis?

If you do not review your report on a timely basis, it can create a lot of problems. This would mean that we are putting our financial health at risk. Some of its adverse effects can include :

  • Cost you Money
  • Lead to Loan and Credit Denials
  • Open chances for more frauds

Also, note that there is a thin line of the gap between a credit report and a credit score. A credit report is complete comprehensive detail about all your banking history, payments, loans, and types of creditors you are associated with. You have got the full right to check the information and make a note that it is correct. On the other hand, a credit score is a three-digit number. It is an estimate of your risk-bearing capacity. It is calculated after having a view of a lot of algorithms.

Credit reports are very readily available and free to access. Reviewing your credit report regularly should be the first and foremost financial habit. Check your credit reports frequently if you want to repair your credit or if you intend to apply for a loan or credit card shortly. You become an informed consumer by being aware of your credit report’s state. By paying bills on time, applying for credit only when required, checking credit reports annually, you can maintain a good credit history.