Your credit report is an integral part of your financial statement. An erroneous report is an indicator that something’s wrong. What if you fall prey to an identity thief who’s planning fraudulent transactions in your name? This could harm your credit reputation to a great extent.
In this article, we will discuss why it is important for you to check your credit report at regular intervals. ⭐Personal Finance ⭐Money Management ⭐Credit Rating
Healthy financial practices result in a secure financial future. The same applies to your credit score. Sometimes, just good credit-building habits aren’t enough to keep your credit score high. One reason is the fact there may be discrepancies on your report, that are keeping you from hitting your credit score goal. Unfortunately, these incidents are pretty common. But fortunately, the advent of technology has made credit reports available to us at the click of a button. All we need to do is find the time and will to scrutinize our credit reports.
In this article, we will discuss the impact a regular analysis of your credit report can have on your credit score.
First things first: Why you should check your credit report regularly
You’ve been paying your bills on time, keeping your bank happy with regular installments. On a good night, you decide to take a look at your credit score – you see yourself credit rated as ‘poor’. Wouldn’t you be bewildered?
While you’ve been maintaining a track record of responsible credit behavior, someone’s folly has resulted in a below-average credit rating for you. Sadly, discrepancies in credit reports aren’t out of the ordinary. That is the reason you need to keep a close tab on your credit rating at least once in 12 months.
Below are some arguments that would compel you to check your credit report today:
- There could be a user error: Most inconsistencies in credit reports are a result of human error. This could either be a mistake on the user’s side or the lender’s. There could be several reasons – you might have mistakenly transposed some letters and numbers in your address or your social security number. Or there may have been a data entry error on the lender’s side while loading your details online. Nonetheless, this error is more common than you think and should be scrutinized.
- To check for duplicate information: A duplicate entry refers to repeated occurrences of a credit account. Duplicate credit reports can cause serious problems. It doubles your debt on paper, drastically increasing your credit utilization ratio. Thus, it is crucial to pay attention to the details.
- You might have received a ‘mixed’ report: People’s names getting mixed up is a common scenario in credit reporting. The reporting agency may consolidate both reports into one, or make separate reports with information from both the users. Children and parents sharing their names are susceptible to this type of error. So if you’re a junior or a senior, scrutinize your report and record such errors.
- To look for ‘negative’ items: A negative item refers to an event that harms your credit score. It may be late payments (30, 60, and 90 days), charge-offs, collections, foreclosures, repossessions, judgments, liens, and bankruptcies. If a negative item makes it to your report, chances are it’ll stay for around 7 years. Thus, it is imperative that you inspect your report for fallacious negative items. If you have defaulted in the past and your negative item is valid, take all necessary steps to improve your score. If it happens to be invalid, you can always raise a dispute and get it removed.
- It’s a good practice to maintain a good score: Keeping a close eye on your credit report periodically is a healthy financial practice. Not only does it help in maintaining your score, but also in tracking your progress. It can especially benefit people with former credit issues, by motivating them in keeping up their progress. Pat yourselves on the back!
- It’s free of cost: The best things in life are free. While your credit report may not be on your priority list of ‘best things’, the fact that it’s free should motivate you enough to get one today. Although a full and comprehensive credit report might come at a cost, most agencies give you a 30-day trial window. Your credit report is one of the key factors that contribute towards your score, and thus, should be kept in check.
How do I check my credit report?
Credit Reporting Agencies (CRAs) are legally obligated to provide you with a free credit report. These Statutory reports contain data about your credit history, but do not reveal your credit score. Here’s what you need to do for a free credit report from the 3 CRAs:
- Experian: Experian is one of the largest CRAs in the UK. They offer a free 30-day trial window for their new customers. If you like their CreditExpert service and wish to stick around, it’ll cost you £14.99/month.
- Equifax: Equifax offers a 30-day trial to new users, after which they charge £7.95 a month to access credit reports.
- TransUnion: Much like Experian, the first 30-days of use are free trial offers run by TransUnion. Once the trial period comes to an end, users will need to pay £14.99/month to access their reports.
Accessing the information on your credit reference file
Requesting CRAs for a report of your financial standing is well within your legal rights. You can make this request through a letter addressed to the CRA or through an online form. Although, leaving a trail of thorough paperwork is always a smarter idea to your correspondence. Your letter must include the following:
- Your full name
- Any other names you have used or been known by in the last six years, for instance, your maiden name
- Your full address including the postcode
- Any former addresses you have lived at in the last six years
- Your date of birth
Your credit report is a building factor for your credit score. If we’ve gotten into your head and have successfully persuaded you to check your report, don’t just skim through it. Inspect your report with prying eyes and review each detail with the utmost attention. A discrepancy in your report may cost you your loan. So if you’re planning on getting one, make sure that your paperwork and records are immaculate and error-free. It takes a lot of effort to reach the score you aimed for, don’t let a mistake ruin it for you.