The Importance of Credit Reports

Your 3-in-1 credit report is a snapshot in time of your credit history, compiled and generated by one of three credit reporting bureaus, TransUnion, Equifax or Experian. The report summarizes your credit (and other) transactions over the last seven to 11 years, including, but not limited to:

• Loan and credit card applications
• Credit card accounts
• Accounts with utility companies (gas, electricity, etc.)
• Bankruptcies
• Overdue child support payments
• Liens

Lenders, landlords, employers, insurance companies and other institutions can purchase credit reports about you from any of the three credit bureaus. They use your credit report to determine how risky it might be to offer you credit, an apartment, a job or other services.

If your credit history is solid and you present little or no risk of not paying your obligations, you’ll probably get that loan, job or apartment, and you may even get a favorable interest rate on your loan or credit card. On the other hand, a credit report that shows a pattern of late or defaulted payments or other financial problems could result in your employment or apartment application being denied, and even if your loan/credit card application is accepted, your interest rate will likely be higher than average.

One important fact to keep in mind: Credit reports are compiled by people, and people make mistakes. In fact, studies show that 25% of all credit reports contain errors serious enough to result in denied credit or loan applications or higher interest rates.

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The Importance of Credit Scores

Your credit score is just a simple way to measure the information in your credit report. To make it easier for lenders and other institutions to assess your credit risk quickly, each credit bureau uses its own formula to "rate" your credit history, using various rating scales.

The better your credit history is, the higher your credit score will be. Just as your credit history, as reflected in your credit report, changes over time, so does your credit score.

People who have a history of paying their bills, credit card accounts and loans on time will have a high credit score (which puts them in the low-risk category). Folks who may have been late on a few payments but usually manage to make payments on time will generate an average credit score. People who default on loans, get into a habit of paying their bills late, or close a credit card without paying the outstanding balance will have a very low credit score (placing them in the high-risk category).

The good news is that credit reports and, therefore, credit scores are ongoing assessments of your credit history.

To sum up, your credit score is important because financial and other institutions use it to determine your individual level of risk when you apply for loans, credit cards, employment, cell phone service, a place to live and other decisions that require a financial commitment.

If you want to start tracking your credit score and the factors that influence it, request your credit score and credit report and begin a credit monitoring program today.

Click here to get your credit score today.

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The Importance of Credit Monitoring

Credit reports and credit scores offer you (and banks, car dealers, employers, landlords and many others) a quick look at your credit worthiness at any single point in time. They don't, however, provide ongoing updates that show how your credit history is evolving over time. That's where credit monitoring comes in.

Credit monitoring allows you to identify and track changes in your publicly disclosed personal and financial information. Often you can set up weekly or monthly alerts that automatically make you aware of new credit applications and accounts opened in your name, address changes recorded by the credit bureaus, late payments that appeared on your credit report and other changes that can affect your credit score.

Regular credit monitoring is the easiest way to:

• Track inquiries made about your credit history. Most inquiries into your credit history are made by reputable firms, but regular credit monitoring can also alert you to inquiries that might be an early indication of potential financial concerns.
  
  
• Correct mistakes or other inaccuracies when they occur. Inaccurate information can pull down your credit score and result in higher interest rates and other financial penalties. Addressing them in a timely manner can help you correct them before they have a significant impact on your credit score.
  
  
• Keep a close eye on activity in your credit file and spot suspicious or unauthorized transactions, which are often an indication of credit fraud or identity theft. Identifying such suspicious activity quickly can save you time and money down the road.
  
  
• Spot fraudulent activity quickly, including signs of identity theft. New, unauthorized accounts in your name are usually a sign of identity theft — and finding them as soon as possible is the optimum first step toward stopping the threat and restoring your identity.
  
  
• Increase your awareness of your credit history and how it affects your credit score.
  
  

Click here to get credit monitoring today.

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