Top 10 Reasons to Check Your Credit Reports

Reviewing your credit reports can help protect your credit. Although you are legally entitled to free copies of your credit reports once a year, the credit bureaus do charge for your credit scores. You can order free credit reports and your credit scores here. Here are ten good reasons for reviewing your credit reports:

Credit Reports and Your Finances (Past, Present, and Future)

1. Improve your credit score: Review credit reports from all three credit bureaus at least once a year, and more often if needed. Check the information on the credit reports against your records. You can dispute incorrect information that can lower your credit score.
2. Credit reports can help you rebuild credit: Bankruptcy and mortgage foreclosure can stay on your credit report for as long as 10 years, but you can still work on reducing credit card debt and improving your credit score. Seeing your credit score increase over time is a great incentive for staying on track with debt management and budgeting.
3. Know your credit standing before buying a home. Order copies of your credit reports before you start shopping for a mortgage or looking at homes. This will provide the opportunity address any problems before you apply for a mortgage. Typically, you'll receive lower mortgage rates if you have a higher credit score.
4. Qualify for savings on consumer credit: Credit card companies are coming down hard on consumers with credit problems. If you have bad credit, you can expect to pay high finance charges including interest rates, fees, and membership costs. Increasing your credit score can help you reduce finance charges.
5. Reduce excessive finance charges: Negative information on your credit report can cause a credit card bank or loan company to raise your interest rate and other charges, even if you've never been late on their account! Knowing and protecting your credit score can help avoid such 'surprises."
6. Guard against identity theft: Carefully review your credit reports for signs of identity theft. Accounts you didn't open or incorrect address and employment information can be signs of unauthorized use of your credit or identity.
7. Prospective employers may check credit reports: Employers may base hiring decisions in part on your credit rating. You must authorize access to your credit records, and will be asked to sign an authorization if a potential employer plans to check your credit history.
8. Starting a business: A high credit score on your personal credit report can help you establish credit for your business.
9. Insurance companies check credit ratings: Insurers base underwriting decisions on statistical calculations involving the potential for losses (claims.) Bad credit can add to insurance costs.
10. Taking control of your finances and life: Monitoring your credit reports can help you establish, maintain, and meet your financial goals as you enjoy the freedom of sound financial management.

The peace of mind that comes with achieving financial stability goes far beyond the number of your credit score. Periodically checking your credit reports and scores can help you avoid the stress and limitations caused by financial problems and the need for credit counseling.

Sources:

• Annual Credit Report Website
• Understanding Your FICO Score

About the Author:
Karen Lawson started writing stories about birds and surfing at an early age. For more than ten years, she enjoyed a productive corporate career in mortgage banking before moving to Reno, Nevada in 1997. Karen earned BA and MA degrees in English (specializing in writing) at the University of Nevada. Significant areas of research and writing include truth and ethics in creative nonfiction, medical humanities, and the symbolism and lore of birds in American literature and culture. Karen has taught English at a community college, is writing a collection of poetry, and enjoys birdwatching and walking her basset hounds.