Why You Should Check Your Credit Report

Americans aren’t checking their credit. In fact, 65 percent haven’t looked at their credit report in the past 12 months, according to a 2014 Harris Poll conducted on behalf of the National Foundation for Credit Counseling. While it seems that some people understand the importance of monitoring credit reports, there’s still room for improvement for more than half of Americans.

Why is it Important to Check Your Credit Report?

If you’ll be applying for credit such as a mortgage, auto loan or even a new credit card, it’s important to know what potential lenders will see when they review your credit report. Knowing that your credit is good can empower you to confidently negotiate for more favorable loan terms and interest rates. If your credit report contains errors, reviewing your report means you’ll be able to address those problems. And, if your credit history contains some blemishes, you’ll be able to take steps to improve your credit profile.

Even if you’re not planning to borrow any time soon, your credit report is a valuable tool for helping you better understand your own spending habits. Here’s a checklist for how you can use your credit report to help you better manage your personal finances:

  1. Request a copy of your credit report from the three major credit reporting bureaus. Your credit report contains information such as payment history, credit usage, account types, account ages and inquiries. You are entitled to a free copy of your credit report from each of the national credit bureaus once every 12 months. Visit to request yours.
  2. Check your credit report for accuracy. Account information, names or Social Security numbers that do not belong to you could be signs of identity theft. Federal law allows you to challenge and dispute what you believe to be inaccuracies. Knowing what is inaccurate can lead to a faster resolution.
  3. Put together a budget to keep your finances in check. This can start with having an open dialogue about money at home. Each family’s approach might be different, but generally, it begins by determining how much money you make compared to how much money you spend every month. Agree on how the family should spend and save going forward.

Your credit report can be an excellent resource for helping manage your finances. Knowing what is in your credit report gives you the opportunity to make better financial decisions.