Monitor Your Credit Report

A credit report is a detailed document that contains a consolidated record of your credit activity (anything related to credit cards/loans). Credit bureaus like Equifax, Experian, and TransUnion maintain this record. They evaluate your financial information to calculate your credit score, which is a numerical score that decides your creditworthiness.

Your credit score tells potential lenders how trustworthy you would be with a credit or a loan. Every individual has the facility to check their credit report from time to time. While some do not care about keeping an eye on their credit report, it is important that you develop the habit of monitoring your credit at least once in a year.

Reasons Why You Should Monitor Your Credit Report

Reporting Errors

Credit report errors are quite common. Your card-issuing company might make mistakes while filing your report with the credit bureaus. It is also possible that the credit bureaus make errors while consolidating your overall credit report.

After all, as they say, "To err is human." We do make mistakes. However, these errors can affect your credit score unfairly. The only way to know if there has been an error is by monitoring your credit report. If you spot a mistake, you must act upon it immediately. Follow up with the credit bureaus regularly and get these errors rectified. Henceforth, make sure that you keep a close eye on your credit report.

Here are a few common errors that you must look out for:

1. A new address or phone number that is not yours

2. Error in the spelling of your name

3. Unknown accounts owned by someone with a name that’s similar to yours

4. The same debt or payment failure note listed multiple times

5. Incorrect dates

6. Mistakenly reported delinquency or late payment

7. False record of the current balance

8. Incorrectly recorded credit limit

9. Closed accounts that are marked as open

10. Accounts appearing various times with different creditors listed

11. Unauthorized accounts

12. Statements in which you are an authorized user, but you are marked as the primary user

13. Unauthorized hard inquiries

To ensure that these errors don't haunt you, try to review your credit report from each credit bureau at least once in a year.

Identity Theft

Have you heard about credit card fraud, scams, data breaches, and identity thefts? Sounds scary, right? An imposter could steal your personal information, such as Aadhaar and PAN, driver’s license number, date of birth, or other financial information and use it for their own financial gain. These are serious crimes that can not only affect your finances but also ruin your credit history.
You must be able to catch a case of identity theft as soon as possible. The faster you report it; the lesser your liability. Each country has a separate set of procedures for dealing with fraud and identity theft. It is in your best interest must educate yourself about these procedures. Staying updated on your credit report can help you notice and resolve such issues quickly, thereby protecting yourself and keeping your money safe.

Financial Infidelity

Infidelity indicates a breach of trust. There have been those unfortunate situations wherein a person was betrayed by a trusted or loved one. Don't be surprised. Incidents like this have become quite frequent, and many people suffer although it is not their fault at all.

My father's cousin had once taken a loan, and he had secretly added my father as an authorized user. My father did not know of this until one fine day when the bank approached him. The account had become delinquent. My father was devastated. Not only was the existence of this account a massive shock for him, but he was also in serious trouble when the bank held him responsible for paying off the outstanding debt as an authorized user. The whole matter got ugly - my father's cousin vehemently avoided everyone, and the bank harassed my father. He had to approach the police for help.

Your credit report contains details of all your financial credit activities. Checking it from time to time can keep you alert and safe from potential financial infidelity.

Progress Report

Checking your credit report gives you clarity and aids you in planning your finances well ahead. Your credit report tells you exactly how much you owe to whom and by when you need to settle the amount. If you are in debt, you get to know about the total amount and also track your monthly progress in resolving the debt.

If you have maintained a clean credit history, your credit scores will be high. Checking your credit report will keep you informed about your borrowing power and creditworthiness. It is always good to keep a tab on this information - you never know when they might be of use.

To Sum Up

Checking your credit report with each of the credit bureaus can be a tedious task, and you may not find the motivation to do it. However, now that you know how important it is, developing this positive habit is definitely worth your while.

If you aren't able to do it yourself, you can sign up with us and use mymoneykarma's Intelligent Finance Tool to have your credit report at your fingertips. You can sit back and relax while we get the job done, and you can access your credit report with one tiny click.