Our society is increasingly dependent on credit reports to measure personal worth, but they can cause nightmares for those dealing with inaccurate information and cases of identity theft.
You can obtain your credit report today for free from AnnualCreditReport.com. Some consumers prefer to check all three credit reporting agencies’ reports at once, while others might check them on a four-month rotation. Some people prefer to pay for a credit-monitoring service so they have access to at least one report on an ongoing basis.
To make sure your credit is in the best possible shape, we strongly suggest taking a look at your own reports on at least an annual basis. Here are three reasons why:
1. Employers want to know.
Despite the fact that, as a TransUnion official admitted in a legislative hearing, there is no “statistical correlation between what’s in somebody’s credit report and their job performance,” employers want any edge they can get from their workforce. It’s a topic we examined a few weeks ago.
As a result, an industry of providers offering combinations of credit checks and criminal background checks has sprung up, making employer checks easier to access. Is there something on your credit report that you don’t want a potential employer to see?
2. Not all debt is equal, but it is still debt.
Your credit report may not paint you as someone who lives beyond their means, but it might show a flurry of unpaid medical bills stemming from an unfortunate incident your family faced in the previous year. You wouldn’t be alone. A Consumer Financial Protection Bureau (CFPB) report found that more than half of all debt on credit reports comes from medical bills.
While unpaid medical bills impact your credit score differently than, say, an unpaid auto loan, the activity shows up on your report all the same. Oftentimes, medical providers offer payment agreements that will protect your credit report.
Being aware of what has been reported and resolving what you can will be beneficial when, for example, an employer takes a look at your credit history.
3. Credit reports are hard to perfect.
Did you know roughly one-quarter of Americans have some kind of error on their credit reports? Some errors are minor and can be corrected easily with a few phone calls or letters. But other errors, including identity theft issues, may be more complicated to resolve. These can affect your ability to obtain credit, rent an apartment, acquire insurance, or get good interest rates on a loan.
It isn’t a new problem. Although credit reporting agencies have long said they are getting better at catching errors and resolving problems, the number of reports with errors has held steady at around 25 percent, and identity theft is at an all-time high.
If you are watching your credit report at least annually, you will be more likely to catch these errors before they get out of control, greatly minimizing the severity of a problem.
When it comes to your credit report, it pays to be vigilant. If errors are uncovered, it’s best to begin the dispute process right away. Credit reporting agencies say they want to improve the quality of the reports they produce and sell. The more informed and aggressive you are at monitoring your status, the more likely you will be able to maintain a credit profile that accurately reflects the values you hold and the choices you’ve made.
Jennifer Bonessi is a member of the DailyWorth Connect program. Read more about the program here.