Your credit report is not just a piece of paper but an important factor behind many things in your life such as the home you live in, the job you get, how much money you can borrow and how much interest you will pay. In nutshell, your credit report and score are important to your overall financial well being.
If you only check your Credit Report while applying for a loan or credit card then think twice. Our health needs time to time checkup, likewise our financial health also needs time to time checkup. So at least once a year you need to check your credit report and score. But you are concerned about checking Credit Score for fear of reducing it, be at ease! Checking your credit report and score won’t affect your credit score because it is considered as soft inquiry. So go ahead and check without worry!
Additionally, regularly checking your credit report can allow you to:
(1) It is an important step in rebuilding and maintaining good credit
It is important to periodically review your credit report to make sure your credit is in good condition, and you are ready to apply for new credit (Credit Card or Loan) and also help you to monitor any ongoing credit or help to monitor recovering any past Credit issue.
(2) It is an important part of managing your personal finance
It is important to check your Credit Report like you check your Bank Statements and Credit Bills or any other Records. Managing credit will help you to track finance in terms of spending and keeping some aside for saving because saving is important to be financially strong.
(3) Maintain error-free and accurate record
If you want to always ensure that your personal and credit information is accurate, error-free and complete then you must periodically check your credit report to keep it error-free. In case if you find any inaccuracy, then you should initiate a step to correct it. At the same time you also come to know that your lenders and creditors are accurately and completely reporting your payment history or not in case of any ongoing credit thus you can always stay updated with accurate information in your credit report.
(4) Know your financial standing
It will help you to check where you are financially standing at present or a current financial status. If you have a good credit score, it is important to continue good financial practices and if your credit score is low, then check the factors behind low credit score and take necessary actions to improve it.
(5) Stay in control of your loan or credit card
Any credit (loan or credit card) is a double-edged sword. On the one hand it will help you fulfill your financial need but if not handled properly can damage your finances. So checking and monitoring your credit report will provide you space to reiterate on the fact to be controlled while spending, and also you can ensure to utilize lower credit on your credit card.
(6) Know whether you deserve a better card or loan
If you have good credit score that will earn you better interest rate or high amount on loan and even higher credit card limit but in case if you have low credit score then it is quite possible that your loan or credit card may be rejected, you will get higher rate of interest on loan, smaller amount then what you applied for loan, lower credit card limit hence make sure you keep an eye on your credit report to ensure your credit is on healthy path.
(7) To avoid rejection of a loan application
Errors on your credit report could keep you from getting a loan on the best available terms. Ideally, you should check your credit report before making any loan application and take steps to:
- Dispute wrong data
- Correct incorrect data
- Improve credit history
(8) To avoid rejection of a job application
Yes, whilst this practice is in its infancy, companies in India have started checking credit history while hiring employees. Although the Indian Law – “Credit Information Companies (Regulation) Act, 2005”, does not permit them to obtain your credit report from the credit bureau, they could still ask you to get your credit report along. Checking if your credit report is accurate and up to date could help you get a Job.
(9) To guard against Identity Theft
Checking your credit report on a time to time basis will help you to guard against identity theft. Identity theft happens when an imposter deliberately misuses your personally identification information to conduct any financial transactions or get financial benefits in your name thus reviewing your credit report periodically will help you identify any unexplained hard inquiries or loan/credit cards that are fraudulently obtained in your name by stealing your identity to safeguard your Identity.
Next time when you come across your credit report, make sure you check it properly and also keep these points in mind so that you will have an intact credit report in hand when you want to go for higher credit.