Do I Need to Check My Credit Report?

Consumers who own credit cards should check their annual credit report without fail. The credit score found on consumer credit reports is an important statistic, which can both define and determine the consumer’s financial health. A credit score can be an indication of how financially healthy a consumer is. Also, credit scores are often used by loan lenders to determine the likelihood that a car or home loan will be paid off in time. If the loan seeker’s credit score is not at a high enough level, lenders and businesses may reject the loan application or transaction. Consumers can check their credit scores at any time, find out which transactions are helping or hurting their credit score, and can find out ways to improve their score. With so much important information at consumers’ fingertips, why not check it often?

The Importance of Your Annual Credit Report

If you have ever used a credit card, applied for a loan, or paid monthly utility bills, you have a credit score. Do you know what your credit score is? A consumer’s credit score is very important because it reveals their financial history, their current level of financial health, and ways that the credit score can be improved. Businesses and lenders can learn a lot about a person’s ability to pay off debts by looking at their credit score. Having a low credit score can lead to transactions or loan applications being rejecting. Consumers can learn what their credit score is at any time, thanks to credit reporting sites which release annual credit reports for each individual consumer. With so much loan and purchasing power being determined by a credit score, it is important that consumers are armed with the knowledge of their credit situation.

Having a good credit score on your annual credit report can open up doors of financial possibility. For example, a person with a good credit score can get accepted for loans, receive excellent credit card deals, and purchase a house. By looking at an annual credit report, consumers can see in full detail how their payment history has affected their chance of receiving credit. Annual credit reports also inform consumers about how they can increase their credit score over time. Knowing your credit score can help you as a consumer to anticipate the likelihood of loan acceptance, to know that your credit information is accurate, and to be more aware of changes in your credit score.

Types of Credit Inquiries

There are two kinds of inquiries in relation to one’s credit score: Soft inquiries and Hard inquiries. Soft inquiries contain limited credit information and occur when you check your yearly credit report. Soft inquiries do not affect one’s credit score. Hard inquiries contain all information related to a consumer’s credit. Hard inquiries occur when lenders check a consumer’s FICO credit information to make a decision about a transaction or loan application. A hard inquiry could affect one’s credit score, depending upon the lender’s decision. All credit card holders are entitled to have 1 free credit report every year from the three leading credit reporting agencies: Equifax, Experian, and TransUnion.

The term ‘annual credit report’ can sometimes make consumers think that their report should only be accessed once a year. Equifax, Experian, and TransUnion do offer credit card holders only one free credit report per year; however, knowing one’s credit score is so important that there are actually multiple scenarios in which a consumer should check their annual credit report. Consumers should take a look at their annual credit report whenever they are preparing for a major credit transaction, like an automobile or a home. It is also a good idea to check one’s annual credit report when receiving a rejection notice for a credit card, when you suspect your identity has been stolen, or if you are actively seeking to get out of debt. Most importantly, you should check your annual credit report at least annually. Since the service of checking credit scores is freely given once every year, consumers should take advantage of the opportunity to check their score rather than remaining uneducated. Think of it as your annual financial checkup: hopefully you do not find anything alarming, but if you do, it can be addressed more quickly through knowledge.

You can also check your credit score with other reputable credit reporting agencies at the following websites.

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