Checking your credit report is vital when it comes to preparing your financial future. Online resources make it easier than ever for you to review your report, and checking it is free. But how do you know when and how often you need to review your report?
If you are preparing for a financed or major purchase you will want to review your report prior to applying for a loan or line of credit. The interest rate you pay on a mortgage loan, auto loan and your credit card interest rates all are determined by your credit score. 3 out of 4 credit reports contain errors. Those mistakes could be negatively affecting your credit score without your knowledge. Review your report closely and keep an eye out for any inaccurate or repetitive information. By law, the credit reporting agencies must remove any errors that appear on your report, but it can take 30 days or more to do so. If you know you have a financed purchase in your near future, be sure to review your report immediately so you have ample time to correct any errors before it affects your loan.
If you are in the process of purchasing a home you will also want to monitor your report closely. Even if you have secured a mortgage commitment from the bank you will still need to keep a watchful eye on your credit report. Banks do a last minute credit check prior to the closing. Problems with your credit report could jeopardize your home purchase, so be sure to periodically check your report until you close on your new home.
Even if you do not plan to make any major purchases, checking your report periodically can alert you to any issues or potential identity theft. It is a good policy to review your report quarterly to ensure that your finances are on the right track.