Your credit report is a powerful tool filled with knowledge about your creditworthiness. It explains why your credit score is as high or as low as it is. It allows you to see how you manage your debt accounts. Your credit report is extremely useful when you are trying to build credit history or repair past credit mistakes. Thanks to the FCRA (Fair Credit Reporting Act), you are allowed to check your credit report once a year, free of charge.
If you haven’t pulled your credit report in over a year, head on over to Annual Credit Report now and do so! And, no, monitoring your credit score is not the same as reviewing your credit report. Your score is a reflection of what’s on your credit report, but your credit report is a much deeper view of your credit situation.
Whether you have or haven’t checked your credit report in a year, there are a few signs you should check it immediately – even if it means you need to pay for it. Check out 5 signs you should check your credit report and make sure things are accurate and up to date.
Sign #1: You Received a Decline Notice When You Never Applied
By law, anytime you apply for credit and are declined, the lender must send a reason why. The letter must outline why you weren’t approved for credit, reflect what credit score they saw, and share how you can learn more information.
If you received a letter declining you for credit, or even a letter approving you for credit, but you never applied for anything, check your credit report. It can mean one of two things: 1) Someone committed identity theft using your information or 2) a store associate applied you for credit against your knowledge or will.
Regardless of what happened, you will want to review your credit report to ensure there are no other accounts in your name, or credit checks that were complete without your authorization. If a new account was opened against your will or without your knowledge, you will need to contact the lender and follow the dispute process.
Sign #2: Your Credit Score Dropped Significantly in a Short Amount of Time
Nowadays, most credit card companies offer free monthly credit score monitoring. You can use this free perk to your advantage. Keeping tabs on your credit score each month allows you to track your progress. If you notice a sharp decline in your score over the course of a month, that’s a red flag that needs to be looked into.
Unless you opened new credit, or racked up a large amount of debt in the span of a month, something else could be happening. To prevent fraud and identity theft, or to just understand what happened to your score in such a short time span, you will want to check your credit report.
Sign #3: You Keep Receiving Consolidation Loan Offers in the Mail
Lenders have access to your basic credit information – that is what allows them to send you all of those “pre-approval” offers. Just because you’re pre-approved, doesn’t mean you will actually be approved. Until you consent to have your credit checked, lenders don’t know the full extent of your credit situation.
However, an indication of how good or bad your credit is can be based on the type of credit offers you receive. If you receive a lot of pre-approval notices, that could be a good sign. On the other hand, if you receive a lot of offers to consolidate your debt, that may not be a good thing. When you are diligently working to pay down your debt, these offers may come. It doesn’t necessarily mean you should be worried.
If no major changes, like paying off a lot of debt or accruing a lot of debt, has happened, but you are receiving loan consolidation offers, it may be worth looking into. There could be something on your credit report that you forgot about that is causing your score to go down. Instead of riding it out, it’s better to know where you currently stand.
Sign #4: You Haven’t Used Credit in Over a Year
If you haven’t used any form of credit in over a year, and you’ve been diligently paying down your debt (or not), you will want to check your current credit standing. Since you are entitled to a free credit report every year from each of the credit bureaus, there should be no reason for you not to see where you stand once a year.
Your credit report doesn’t just show where you currently stand with debt, it can also show you any bills that you may have forgotten about that went to collections. Utility bills, medical bills and cell phone bills can all make their way to collection agencies if you fail to pay. You should never go longer than a year without checking your credit report.
Sign #5: You are Thinking About Moving
Did you know that your approval into a new home or apartment is contingent upon what your credit report shows? More importantly, when moving to an apartment, a landlord has the right to raise your rent if your credit is bad.
When you are thinking about moving some time in the future, it’s a good idea to start keeping tabs on your credit. Start by ordering a copy of your credit report and reviewing it for accuracy. If all looks good, great! However, that’s not the extent of your work. Your next task will be paying down debt and improving your score. Once those tasks are done, you can feel more confident moving into a place that will leverage your credit history.
If you don’t know how to read your credit report, check out the article Quick Hit Guide to Understanding Your Credit Report. You can also listen to the podcast related to the article by clicking below.
As I mentioned earlier, your credit report is a powerful tool that can help you stay on track with your credit progress. You don’t want to skip a beat, especially when it comes to your credit. When was the last time you checked your credit report? Do you use a credit monitoring service? Share your tips and experiences by posting a comment below!