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Credit Report and Credit Score

In much the same way that a resume displays your work experience to a prospective employer, a credit report provides prospective creditors (and in some cases employers and insurers too) with a detailed picture of your credit history. And like a resume, your credit report can influence whether you will receive what you are applying for.
Ideally, your credit report is an accurate, up-to-date reflection of your credit history. However, since we do not live in an ideal world, there are many reasons that your credit report could contain inaccuracies that might prevent you from receiving the credit you deserve. The good news is you can take action to keep your report accurate. Here are the top five reasons why you should make a practice of regularly reviewing your credit reports:

Free Credit Scores & Inaccuracies

Many inaccuracies on a credit report can be the result of simple human error, and are therefore are not difficult to have corrected. Of course, if you do not order your credit report, you might never know about them. Whether the inaccuracies relate to payments not credited, late payments, or data mixed in from the credit file of someone else with a name similar to yours, you will want to bring the inaccurate information to the attention of the credit bureau promptly.

Tracking Payments

One of the most important elements of credit is a demonstrated history of on time payments. Once you send the check though, anything can happen — a delay in the payment being received can kick you over to a 30-day delinquency. If you call your creditor and explain the situation, they might adjust the information. Of course, if you do not read your credit report, you will not necessarily know which payments are being received and reported properly.

Identity Theft

Identity theft is an insidious crime, involving a thief who assumes your name to open new accounts, divert your card statements to another address, and run up all sorts of bad debt without you ever knowing about it until collectors come calling. Over time, identity theft could jeopardize your ability to obtain further credit. The best way to catch a thief who is using your name is by getting a copies of your free reports, which will show you if there are accounts listed you know you have not opened. For example, if a thief has intercepted a pre-approved credit card offer in your name and sent it in with a change of address, your credit report will include the account.

Inquiries

If you are shopping around for a loan or more credit, you should know that when creditors check your credit, it places an inquiry on your credit report. Inquiries can add up, which is often interpreted as a negative by creditors. For this reason, too many inquiries can actually make getting credit more difficult. Moreover, if you did not authorize someone to look at your credit report and they did, they may have broken the law.

Unauthorized Charges

Though consumers are protected financially from this abuse, other creditors may take note of all this activity and decide to raise your interest rates or refuse to grant you a loan. Reviewing your reports will help you catch new activity on accounts that you have not been using, or may have closed.
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