3 Things You Should Look for On Your Credit Report
If you are not familiar with looking at a credit report, the information can be overwhelming. For those of you unfamiliar, a credit report essentially tracks and reports on your performance when it comes to…credit! So anytime you borrow money from a financial institution, your pay history will be tracked. Other companies use this report to determine whether or not they would like to lend money to you. The factors that go into this decision is the timeliness of your payment, the amount of debt you have out there now, whether you have any collection accounts or judgments against you, or if it appears you are trying to get more debt (inquiries). Credit reports are complicated, and we could spend volumes explaining everything about them. However, for the purpose of this article, we will assume you are familiar with them, and focus on what you should periodically review on your report. As a rule of thumb, it is good practice to pull your report at least every year, but some prefer to do so more often.
The 3 Things You Should Look for On Your Credit Report
1. Any inaccuracy. As I said earlier, there is a lot of information available on your credit report. Not only does it list your current and past payment history, but it also will list personal information just has your address, both past and current, and your employment history. Inaccuracies can have a great impact on both you credit worthiness, as well as be a leading indicator for potential fraud. First, let’s discuss the credit worthiness aspect. There could be inaccuracies with your payment history, or perhaps an account is listing negatively when it shouldn’t. You can follow the process dispute this information. Keep in mind, companies are fairly accurate in their reporting, but mistakes can happen. They are also pretty fair with fixing mistakes when brought to their attention. However, this isn’t a quick fix way to erase actual delinquencies or negative payment histories.
As for the fraud aspect of things, inaccurate personal information such as work history or addresses can be a way that identity thieves feel out “soft targets”. They change some information to see if anyone is noticing, and if it seems that a particular individual doesn’t check their credit report often, they will attempt more brazen attempts to fraud, which will typically include opening credit accounts in your name.
2. Inquiries. Any time you apply for credit, a company will review your credit report to determine your credit worthiness. At that point, an inquiry is placed on your file. This serves two purposes. First, it tells anyone reviewing your credit file how often you are applying for credit. The perception is that the more often you apply for credit, there might be something wrong with your finances and it may lead to future problems and impact your ability to repay. The second purpose is that it gives you the ability to see who is looking at your credit report. Only companies that you apply for credit should review your file. In addition, these inquiries should only last for two years, but sometimes they stay on longer than that. Since inquiries cause a slight deduction in your credit score, you should be sure to have long lasting inquiries removed.
3. Unfamiliar accounts. As stated earlier, someone attempting fraud will not normally try to use one of your existing accounts. Instead, they will open a new account and run up a balance on it and hope to disappear before you notice. That is why you should review your credit report and ensure that you know each account that lists under your file. Sometimes the reasons will not be nefarious, but rather simply accidental. Either way, you do not want to have an account that you do not have control over appearing on your record, and impacting your overall credit worthiness.