- Why You Need to Review Your Credit Report Regularly
There are many documents that play an important role in our financial lives, but perhaps no one document is more important than the credit report. The information contained in a credit report is used not only to make lending decisions but can also be used to determine car insurance rates and even whether or not you land that dream job.
In fact many people fail to take into account just how valuable and important their credit report is, at least until something happens that opens their eyes to its importance. Many people fail to understand how important their credit report is until they are turned down for a car loan, mortgage or other type of loan.
In addition to the obvious uses of determining the interest rate and terms of a loan, the information contained in an individualís credit report is often used to determine rates for automobile insurance. Not all insurers use credit reports to determine car insurance rates, but many do. The reasoning behind this use of the credit report is that studies have shown a correlation between credit ratings and insurance claim filings. It is important to keep in mind that your credit report can be used for far more than making lending decisions.
In fact, a poor credit rating could even end up costing you a job, since many employers have begun to incorporate credit checks into their overall background check procedures. The reasoning behind this decision varies from company to company, but in many cases employers feel that those with a stable and positive credit history will make more stable and reliable employees. Whether this is true or not, it is important to keep in mind that potential employers may want to check your credit before extending an offer of employment.
All these are valid reasons why you should keep a close watch on your credit report, but the main reason of course is to make sure you do not pay more for loans than you should . The information contained in a credit report is a critical factor lenders use to determine how much money you can borrow, and at what interest rate. If your credit report contains erroneous information, you could end up paying much more than necessary, and that could cost you hundred or even thousands of dollars. And in some cases that negative information could cause you to be turned down for the loan altogether.
Fortunately checking your own credit report is a fairly easy and straightforward procedure, and a recently enacted law means that all consumers are entitled to receive a free copy of their credit report on an annual basis. Requesting this credit report is free and easy, and it provides a great way to keep on top of your credit by eliminating any errors.
Upon receipt of your credit report, it is important to review it carefully, starting with the identifying information listed. If your name, address, or other identifying information is not up to date, be sure to notify the credit reporting agency at once. Also notify the agency if you spot any accounts you do not recognize, or if any of your paid off accounts still show as being open. Also question any other discrepancies, such as an account that shows a late payment when that payment was really made on time. Mistakes like these could end up costing you a lot of money, so be sure to ask that any problems you find be corrected. Also be sure to follow up in a few weeks to make sure that those erroneous negative entries have been removed. Keeping on top of your credit report is one of the best ways to keep your financial life in order.
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