Why You Should Monitor Your Credit Report

Now that we seem to be in a new era of tighter credit, your credit report is more important than ever. The simple fact is, your credit report can haves a massive impact on your life.

For example, virtually any time you apply for credit - whether it is a loan for a car, an extension to your mortgage, or an account at your favorite grocery store the people who look after deciding if you are credit worthy are going to check your credit report.

It seems that sometimes your credit report is the only thing they check. If it comes up looking rosy then you are good to go - you will probably get the credit you are after.

But if it is not so good, you can expect to be denied or, at the very least, pay a higher rate of interest. So you have a very direct interest in making sure your credit report reflects well on you.

The most important reason you should keep an eye on your credit report is that it may be out of date or may contain information that is not accurate.If you know how to obtain your report, you can cross-check it for potential mistakes, and monitor your future financial behavior in order to improve it.

Checking your credit report and keeping it current and as accurate as possible is especially important if you have gone through bankruptcy. As you probably know, bankruptcy will have erased some or all of your debts, so make sure that your credit report reflects these changes.

Even if you have gone through bankruptcy, potential lenders are interested in your credit report because they are well aware that people who have gone through bankruptcy must eventually try to rebuild their credit.

What is included in a typical credit report? First, it contains some basic personal information such as previous addresses, public records, date of birth and your social security number.

But most important, it contains a history of your bill paying habits and patterns. It shows if you pay your utility bills on time, or if you have missed payments on your credit cards. It also shows which accounts have been paid out, and how much you still owe on the ones that remain.

What does the credit report tell potential lenders about you? It makes no official judgment. It is simply a collection of information that has been reported by various lenders. The lenders themselves will draw judgments from the report, deciding whether they are prepared to extend you further credit.

So why should you bother monitoring your credit report? As mentioned previously, your credit report is a collection of information submitted by lenders, and there is no guarantee that this information is correct or up to date. Monitoring your credit report is the only way you can ensure it is accurate. When you find errors you can have them fixed.

Second, a credit report is usually a good reflection of the way you handle your finances. Many people use their credit report as a guide to clean up their act and do better in the future. It is also an indispensable tool for helping you decide to enter into a debt consolidation or bankruptcy arrangement.

How do you obtain your credit report? There are two popular methods. The first is to write and make a request to a credit agency such as Equifax or Experian. For a small fee, they will send it to you in the mail.

A more popular method these days is to obtain your report directly online. This is a simpler and faster solution. Once again, you will pay a small fee. Shop around though, as some services will provide you with a free trial.