The end of the year is near, but have you looked at your credit yet? If not, you should be thinking about adding credit checks to your New Years Resolutions for next year!
Misconception: “If I check my credit score once a year, even from only one credit bureau, I’m set for another year.” On the contrary, your credit score can change on a daily basis and that means one annual review of your credit doesn’t provide you an accurate credit check.
Every single day, the data in millions of credit reports are updated. And if you have any loans, use credit cards or have a line of credit, your credit report could be one of those millions getting updated. A change to your credit report often means a subsequent change to your credit score.
A regular credit check is important for a number of reasons, the least of which is peace of mind. Knowing your “financial fitness” prepares you for things like negotiating rates with lenders or increasing the credit limits on your credit cards.
Top 5 benefits of checking your credit
Credit Report Accuracy.
Firstly, is the data on your credit report (from the of the 3 major credit bureaus) correct? Did a bank customer service representative unintentionally input the wrong information? Did a creditor mix you up with another customer? Keeping a constant eye on your credit reports helps make sure you know if there’s information in them you might have to dispute.
Signs of Identity Theft.
Is your FICO® Score a lot lower than you think it should be? This is just one of the potential signs that an identity thief might have used your personal information to gain credit and/or make purchases. A quick review of your reports can help you determine if, for example, a new account has been opened in your name—one you never authorized. A credit check can help stop criminals in their tracks.
Know Your Financial Health.
Knowing where your credit stands and how you come across to lenders is an important part of staying financially fit. If you’re in good shape, continuing to keep an eye on your credit helps you maintain a positive credit profile. If you’re in a not-so-good shape, you can start immediately working on ways to help improve your credit so that you can start getting the credit you deserve.
Reviewing your credit reports and FICO® Scores on a regular ongoing basis helps you learn about different “cause and effect” scenarios. For example, you’ll see how certain actions you take can help raise or lower your credit score or how specific types of inquiries affect (or don’t affect) your credit score. You’ll also be able to start understanding the impact different elements have on your FICO® Scores, such as payment history and account types.
Lastly, by keeping a more consistent eye on your credit, you should be able to improve your score and possibly get better rates on your credit cards and loans. If your credit is already good, consider requesting a lower rate (or additional perks) from your current credit card company. If you’re in the midst of improving your score, consider a 0% balance transfer card and use your improved credit profile as a way to strengthen your bargaining power.
As these five benefits suggest, there are many ways that staying current with your credit profile can benefit your financial health. And to make it even easier, products are available that provide you with items like:
- Your credit report – updated quarterly
- FICO® Scores from all 3 credit bureaus
- Identity theft monitoring
- FICO® Score change alerts
…and lots more.
Search these products out and choose the one that you think might be most sensible for your situation. The best part is, these products can send you the information you need automatically and on a consistent basis – so you don’t have to add another item to your “to-do” list.
See how others are staying aware of what’s going on with their credit by visiting the myFICO forum.