The information listed in your credit reports has an important effect on your financial life. Your credit scores are created by the information in your reports. Credit scores determine whether you can receive favorable terms for financial products. While employers do not pull your credit scores, they may consider the information in your reports before extending a job offer. You can monitor your credit ratings and reports throughout the year. By checking your credit, you could:
- Determine your credit worthiness: Your credit reports and scores are good indicators of your financial standing. Keep in mind, even if you do have poor credit scores or negative information listed on your report, you can always set goals to improve both.
- Fix mistakes on your reports: If your credit scores drop suddenly without any explanation, it could indicate that incorrect information was posted to one or more of your credit reports. You may fix these errors after they are posted by monitoring your credit.
- Catch identity theft: Unexplained decreases in your scores could also be an indicator that an identity thief is opening new lines of credit in your name. New accounts or inquiries that you did not approve may show up on your credit reports. You may could catch on to instances of identity theft shorty after they happen by monitoring your credit.
- Avoid being surprised by lenders: Some lenders require you to meet specific credit score ranges for favorable terms or before they will extend an offer. You could avoid being surprised by rejections or less favorable terms by knowing your scores beforehand. Keep in mind, some lenders use “industry specific” FICO scores.
- Learn how credit scores and reports work: You can learn a lot by monitoring your credit. As you work to raise your score, you could learn which actions result in increases or decreases.
How Do I Monitor My Credit?
There are many services that allow you to monitor information on your credit reports and your credit scores. MyFICO.com allows you to view dozens of different FICO scores and sends you regularly updated credit reports. However, it is not free and may even be prohibitively expensive for some people. VantageScore has a list of services on its website that will determine your scores under its model.
It is also possible that your bank offers credit monitoring services that will provide you with frequent updates. These credit monitoring services may be bundled with your bank’s identity theft services, so try to inquire about both. Unfortunately, these services are not always free. You can also pull free credit reports from annualcreditreport.com once per year. However, this website does not provide you with your credit scores.
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