The Consumer Protection Financial Bureau recommends checking your credit report annually. A 2019 survey by Credit Card Insider, found that people actually don’t check their credit score enough. According to their survey:
- 60% of respondents didn’t check their credit report over a span of six months.
- 18% of respondents had NEVER checked their credit scores.
- Only 21% of respondents checked their credit score monthly.
Most banks, credit card companies, and other financial institutions offer some sort of credit monitoring for free, albeit very basic. Tony’s Credit Repair also offers through credit reporting and analysis that will give you inputs on how to improve your credit.
Why should you check your credit report?
Errors on your credit report can negatively impact your credit score and your ability to get approved for credit. By checking your credit report regularly, you can identify errors and take steps to correct them before they cause damage. Additionally, checking your report can help you spot signs of fraud, such as accounts you didn’t open or unauthorized inquiries on your report.
Sometimes, certain things that you sign up for might include hidden costs, such as subscriptions. If you cancel your subscription, a bill that you weren’t aware of might end up on your credit report.
Your credit report is a snapshot of your credit history, including your payment history, credit utilization, and types of credit used. By checking your credit report regularly, you can monitor your credit health and identify areas for improvement. For example, if you notice that your credit utilization is high, you can take steps to pay down your balances and improve your credit score.
If you plan to apply for credit in the near future, such as a loan or credit card, checking your credit report beforehand can help you prepare. By knowing what’s on your report, you can address any errors or negative information and increase your chances of being approved for credit.
Credit monitoring is also risk mitigation
Many people view credit reporting and monitoring as a reactive tool. In fact, credit reporting can be a very proactive way to take steps for planning for the future. You might be on the cusp of a perfect credit score or a few points away from a score that lets you qualify for a certain type of loan. Credit reporting will help you understand where the risk is in your credit history. By paying off a loan or a credit card, you might be freeing up several points on your credit score.
The Federal Trade Commission estimates that it takes six months and around 200 hours of work to recover from identity theft. If your identity was stolen, you might not be aware of it until well after the crime has happened. The FTC also reports that the average amount stolen from a person during the typical identity theft crime is around $800. If you are monitoring your credit monthly, you might have time to reach out to your credit and financial institutions and put safeguards in place to protect your finances.