One of the financial management items that we often forget to do is to check the credit report. Your credit report is a look at your current credit situation, as reported by others. It includes information on the way you pay your bills, how much debt you have, and other information. Many people tend to ignore their credit reports — especially if they aren’t planning on applying for credit anytime soon. This, however, can be a mistake.
Identity Fraud and Your Credit Report
Your credit report can alert you to unusual activity. You do need to watch your credit card accounts, and your bank accounts for unusual activity, since that can be a sign that your identity has been stolen. However, if someone has opened an account in your name, it won’t show up in your existing accounts. But it might show up on your credit report.
If you pull your credit report, look for accounts that shouldn’t be there. You can then work on fixing the problem. You can make sure the account is closed, and put a fraud alert on your report so that others know that your identity has been compromised, and no new accounts can be opened in your name. Keeping track of what’s in your credit report can be a way to catch issues with your identity, and prevent further problems.
Your Credit Report and Other Financial Decisions
Even if you aren’t applying for credit, what’s in your report can affect other finance-related decisions. Your credit score, of course, is based on information in your credit report. If there is inaccurate information, you credit score can be affected. While you might not care about it from the standpoint of getting a car loan or a credit card, it might matter in other cases:
- Insurance rates: Your insurance premium might be based, in part, on your credit score. Many insurers use it as one of the factors they consider when determining what sort of risk you are. Auto insurers, especially, might consider your credit score.
- Some service providers: Some satellite/cable TV providers, and some cell phone service providers, might run a credit check before approving you for service.
- Landlords: Increasingly, landlords are checking into your credit before approving you to be a tenant. In some cases, if you are approved, you might have to pay a higher security deposit with a lower credit score.
It is also worth noting that your credit report might be used as part of a job interview. While potential employers aren’t supposed to look at your credit score, they can get a limited look at your credit report. The information in your credit report might lead an employer to decide that you present too much of a risk, especially if the position deals with money, or makes you vulnerable to bribes.
If you check your credit report regularly, you can look for duplicate loans and inaccurate information that can lower your score, or cause others to reconsider your situation. Checking your credit report is important to stay on top of your financial situation as others see it.
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