5 Signs You Should Check Your Credit Today
Your credit will determine many things, and for us it is no exception. If you haven’t checked in a while and are now applying for home, you should have done it awhile ago! There many things that can happen even if you are not touching your credit, so here are some tips on when to check your credit.
1. You’ve never checked your credit reports before.
By law, you’re entitled to see your credit reports – one from each of the three major credit bureaus: TransUnion, Equifax and Experian – once per year at no cost through AnnualCreditReport.com. A 2013 report by the Federal Trade Commission found that 20 percent of consumers had an error on at least one of their credit reports. Since the information on your report is used to create your credit score, a mistake might mean that your score is lower than it should be. This can result in higher interest rates on loans and credit cards, or perhaps getting denied for new credit altogether.
2. It’s been over a year since you last reviewed your reports.
Checking your credit reports is smart, but once is certainly not enough, contrary to what many Americans seem to believe. Only 34 percent of U.S. adults have ordered a copy of their credit report in the past 12 months, according to the National Foundation for Credit Counseling’s 2015 Financial Literacy Survey. If you’re among the other 66 percent, there’s no time like the present to check this off your to-do list. Since most lenders report account information on a monthly basis, you should review your reports at least once per year to be sure an error hasn’t landed on one of them.
3. You plan on applying for a mortgage.
Getting a home loan requires going through a rigorous application process, including a careful review of your credit by the prospective lender. Checking credit reports before you submit your application can give you a sense of your chances of getting approved and what your interest rates might looks like. Your report can help you think more realistically about what homes you can afford. If you pull your credit report and find that it has some black marks, you’ll be able to adjust your borrowing – and house-hunting – expectations accordingly.
4. Your credit score drops unexpectedly.
Thanks to the FICO Score Open Access program, millions of consumers can access their FICO scores for free each month in many different ways, including credit card statements, student loan bills and auto notes. If you view your score, and notice a big, unexpected drop, it’s important to do some investigating – pronto.
5. You’re denied a loan, insurance policy or job because of your credit.
You should receive an “adverse action” notice from a bank or business that’s denied you a loan or any other financial product because of your credit. The notice should include, among other things, a free credit report from the credit bureau used in the application process. You must request the report within 60 days of receiving the notice. A copy of your credit report can provide insight into why you were rejected and help you figure out how to change your financial habits to improve your credit score. If you handle your finances responsibly, the denial might come as a surprise and could be an indication of fraud or a credit reporting error. In any case, your credit report can empower you to identify and remedy the problem, ensuring a different outcome the next time you apply.