Good credit can help you save hundreds, if not thousands, of dollars on all sorts of purchases. Monitoring your credit is a healthy habit that can aid in spotting early signs of identity theft and negotiating the best deals. From getting approved for a credit card to getting the apartment of your dreams, your credit plays a big role in achieving your financial goals. Let’s learn more about why it makes sense to invest some time in protecting this important resource.
Who Uses Credit?
Credit report and credit score data are used across a wide variety of industries to make decisions about you. Most of us know that credit card companies and lenders for home and auto loans use credit to evaluate potential customers. But did you know that credit is also often a major factor in setting your home and auto insurance rates? Or that your credit can be checked when you apply for a new utility account, bank account, or cell phone? And most importantly, that your credit can prevent you from getting the home or apartment you want? Employers can even check your credit when you apply for a job. Credit is often the “first impression” that a business gets about you.
What Can Happen?
Credit is also a delicate resource. It is very easy for inaccuracies or fraud to damage your credit reports and, in turn, your credit scores. There are a couple common ways that your credit can be accidentally damaged. The credit bureaus could receive data belonging to another consumer and mistakenly add it to your credit profile. This type of clerical error often occurs when Social Security numbers are similar and get mixed up, or if you have a common name, like John Smith.
Your credit can also be damaged by identity theft. Identity theft is a pervasive crime where a thief uses your personal or financial data for his or her own gain. This could be as simple as a thief using a stolen credit card or as complex as tax fraud using your Social Security number. Most identity theft crimes occur offline, through the theft of mail, personal documents, or wallets. In a great deal of cases the identity thief is someone the victim knows personally: a relative, friend, co-worker or employee. It is estimated that eight million people are victims of identity theft each year. Identity theft damage can be difficult to remove from your credit reports if it is not caught early, and can create problems and confusion for many years after the initial “theft.”
Why Should I Monitor?
Monitoring programs allow you to keep a close eye on your credit resources. You can track positive changes to your credit profile over time, prepare your scores for a major purchase, and watch for damaging records. When you monitor your credit, you ensure that you’ll be the first to know if anything changes. In this way, you can take action quickly to resolve any inaccuracies or identity theft cases as soon as they happen.
Monitoring all three of your credit reports ensures that you have the most accurate and up-to-date understanding your credit. If you manage your credit resources wisely, you will be prepared for whatever lies ahead.