Credit

The Importance of Your Credit Report By Iwona Kurecka

Everyone knows that a good credit report and high credit score are important to getting the lowest available interest rates on loans. The low interest rates advertised by banks and credit unions are typically only made available to the customers with the best credit scores, so it is important to keep your credit score as high as possible and keep your credit report free of negative entries.

However, the importance of the credit report does not end with financial matters. Credit reports are used for a variety of purposes which are not related to mortgage and other loan applications. For instance, auto insurance companies often request copies of their applicants' credit reports. The theory behind this is that according to their research those with the lowest credit scores are the most likely to get into accidents. Many car insurance shoppers do not realize that they can be asked to pay higher premiums based on things besides their driving record.

Credit reports are even used by employers to decide whom to hire. Many employers look upon a good credit history and a high credit score as proof of stability and dependability. While this may not seem fair to many job seekers, it is important to remember that your potential employer may take a peek into your credit history before deciding to hire you.

With all this riding on your credit report, it is important to keep it as positive as possible. That means, that at a minimum every consumer should pull a copy of his or her credit score at least once a year. An annual review of your credit report will give you a heads up about any errors in your report. In addition, it will also alert you to possible fraud or identity theft, a growing threat in today's online world.

After you have obtained a copy of your credit report, be sure to examine it carefully. Look especially at the section that deals with inquiries against the report. Every time you apply for a loan or credit card, an inquiry is initiated against your credit report. If there are any entries you do not recognize, be sure to notify the credit reporting agency immediately.

Likewise, if you notice any errors, such as a bill that has been paid off but still shows as outstanding on the report, be sure to notify the agency and request that it be removed. When requesting corrections to your credit report, it is important to follow up and make sure they have been removed.

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