According to a survey done by MoneyTips in June 2017, they asked 410 Americans on different issues concerning credit. Out of the 410, 29% admitted to not knowing their credit score. It is not surprising that some people are not aware of their credit score. However, you should always check your credit report as it may be the stumbling block to qualifying for loans.
Credit reports affect mortgage rates, loan approvals, credit card approvals and to some extent some job applications.
What is A Credit Report?
A credit report is a report containing your past and present credit accounts and loans. They are often reported by companies you have done business with. These businesses often report your credit history to either one or all three major credit reporting firms: Experian, Equifax, and TransUnion. So, in the case you delay payment, it will reflect. The score is then tabulated from your payment history.
The Need to Check Your Credit Report
Some people are aware of credit reports but never bother even to check and see if everything is okay. Credit reports can be deal breakers when applying for a home mortgage loan, a business loan or a credit card.
Why do you need to check your credit report?
Well, the fact that the report is something that affects your financial well-being, it’s important to check. Furthermore, it’s free. This report is crucial as it plays a huge role in your future business transactions.
You get to know where you stand
Checking your credit report helps you know where you stand. There is an overall score you get which is often ranging from 300 to 850. Different credit rating companies have different algorithms used to calculate the score. However, the higher the score, the safer you are.
It gives you a sense of financial direction
We all know how finances are a big deal for everyone. You should scrutinize your credit report just the same way you do for credit cards. For you to be financially successful, it’s important to keep track of your spending as well as saving.
It helps you rebuild and maintain good credit
The biggest deal breaker is when you apply for a loan and you are denied because your credit score is low. Always review your credit report as it will keep you in check. You will be able to monitor your progress.
Most often, any negative information that’s on your report usually stays for about seven years. However, for bankruptcies, they often stay for ten years depending on what type of bankruptcy you filed.
Having a shaky credit report means you can’t access primary financial services such as getting financing for your startup. Credit repair companies such as CreditRepairCompanies.com can help you figure out errors on the report. They make work easier for you and in the long run, the mistakes will be rectified which in turn improves your credit score.
It helps in making you know if you are an identity theft victim
According to the Federal Trade Commission (FTC), an estimate of 9 million U.S Citizens have their identities stolen every year. Your credit report can help you know if you have been a victim too. In case you find social security numbers or bank accounts that are not yours, then you may have fallen victim.
In the case that you need to apply for a loan
Sometimes, the loan application process itself is tedious. There’s no point in applying for a loan when you have no clue about your credit report and score.
Familiarize yourself with your credit report so that you can have a clue on whether or not you qualify to get a loan.
Note, for every credit application; it lowers your credit score since lenders will have to check your credit report before determining if you are eligible for a loan. This is why you need to limit the number of times different lenders retrieve your credit report.
In the case that your credit score is below average, ensure to work on improving it before applying for a loan for higher chances of qualifying.
Cosigning a loan affects your report
Sometimes, you may find yourself cosigning a loan for your friend or family friend out of good faith. Always check your credit report because if the person you cosigned makes late payments, it will appear on your report. Don’t assume that they still pay the loans as this will affect you as well.
All in all, your credit report is crucial for future financial moves. Always keep track of it and find ways you can improve the overall score. When your credit report is good, that means your score is impressive as well.