Top 5 Reasons to Check Your Credit Score Regularly

Most people don’t realize that they should check their credit score on a yearly basis, nor that it can be done completely free of charge.  Knowing your credit score and understanding what it means will help you learn how to gain control of your finances, and your future.  And you can get this information for free by requesting a credit report from www.annualcreditreport.com.  As for why you should do it on a yearly basis, it’s mostly because you don’t want to do it too often (at the risk of looking like a lot of people are requesting your credit information, which goes on the report).  And if you check it annually, you’re likely to have plenty of time to correct problems.  But if you want to know why it’s important to check your credit score at all, here are a few good reasons.

1. Know your score.  For one thing, it can be very useful to know what your score is.  For example, if you are planning to purchase a home, lenders will require you to have a score that is a minimum of 620-650 (anything less is pretty much an automatic denial).  If you have something over 720, you’re in good shape.  This principle also applies to car loans, student loans, and pretty much any line of credit you might wish to obtain.  By knowing your score, you can determine if you are ready to make a large purchase, or if you need to improve your credit first.
2. Learn what makes a score.  It’s not enough to simply know what your score is; you must also know how to increase it.  A credit report will show you everything that contributes to your credit score (mainly reports from anyone you owe money to, from banks to lenders to credit card companies).  By seeing what they’re reporting about you (pays on time, pays in full, etc.) you can more easily figure out the steps needed to shape up your score.
3. Pinpoint problem areas.  By checking your credit report annually, you can look for any problem areas that might need work.  For example, suppose you had a dispute with a credit company that hasn’t been cleared up yet.  This can negatively impact your credit score until the matter is resolved.  Whether you’re in dispute or not, they’re going to report that you owe money and you’re not paying it.  You need to know when such issues are clouding your credit.
4. Remove mistakes.  In some cases, black marks may remain on your credit even though you’ve resolved a dispute or paid the company in full.  Most creditors report regularly, but sometimes these things slip through the cracks.  Since it’s your credit on the line, the onus is on you to contact these companies and make sure they repair the damage.
5. Avoid fraud.  In this day and age, identity theft is practically run-of-the-mill.  It’s important you check your credit report regularly to see if there is any fraudulent activity occurring that could be lowering your score.  If you see lines of credit you didn’t take out, you’ll want to take corrective action immediately to keep your credit score from suffering.

Sarah Danielson writes for No Credit Check where you can find anything from a prepaid satellite TV to a car rental no credit check.