How and Why You Should Get Credit Reports Regularly
Credit has become one of the most important necessities in a consumer’s daily life. It is considered as a top determinant of a person’s financial stability. People are becoming more aware of its significance in securing a job or any type or loan, service or line of credit.
Due to its weight in the matters of our finances, individuals must also understand the value of credit protection.
Regularly checking our credit reports helps us understand how credit works for us and how it affects our lives. Apart from helping us detect identity theft and other credit fraud, it also allows consumers to be informed of the different types of credit services.
Let us discuss these factors one by one.
Credit services are benefits that can be obtained with outstanding credit. Mortgages and home loans, leases on properties, auto loans and low interest credit cards are just some of the examples of such services. Qualification for these benefits is determined by referring to a consumer’s credit report. Companies and financial organizations evaluate an individual’s financial capacity by checking their credit standing.
Meanwhile, identity theft and credit card fraud have become two of the most prevalent financial crimes to date. More consumers are being victimized by felons who use stolen personal data to open credit cards accounts that they will tremendously abuse. The rate of this felony is staggering.
In a recent study made by the Consumer Sentinel Network (CSN pdf), it was reported that “The CSN received over 2 million complaints during calendar year 2012: 52% fraud complaints; 18% identity theft complaints; and 30% other types of complaints. Identity Theft was the number one complaint category in the CSN for calendar year 2012 with 18% of the overall complaints, followed by Debt Collection (10%);Banks and Lenders (6%); Shop-at-Home and Catalog Sales (6%); Prizes, Sweepstakes and Lotteries (5%); Impostor Scams (4%); Internet Services (4%); Auto Related Complaints (4%); Telephone and Mobile Services (4%); and Credit Cards (3%).”
And it does not stop there. What’s more alarming is the fact that over “one million complaints were fraud-related. In the same study, it was stated that consumers paid over $1.4 billion for fraud complaints. Also, 57 percent of all fraud-related complaints reported the method of initial contact. Of those complaints, 38% said email, 34% claimed they were victimized through telephone while 9% of those consumers reported mail as the initial point of contact.” Now we must ask ourselves this question. How do we prevent this from happening?
Credit services and credit crimes are two extremely different things. However, both rely on regular credit monitoring to mutually safeguard and help prevent damages that can easily affect both. The first step in securing our credit is to know where we stand. We must constantly check credit reports to ensure that everything is properly filed. Errors and inaccuracies can be quite common. If we do not correct these mistakes, our credit score can also be gravely affected.
Each year, consumers are entitled to get a free copy of their credit reports from the three major credit reporting agencies: Experian, Equifax and TransUnion. These agencies keep an up-to-date reflection of your credit history. The free reports do not include your credit score however. Another thing to note is the information recorded in each bureau’s credit report can be different from one another, because the credit bureau’s get information from different sources at different times. Thus it would be wise to check them side by side for errors or fraud underway.
For those who want to employ maximum protection, credit reports can be ordered from the credit reporting agencies: Experian, Equifax and TransUnion, for a minimal price that do include your credit score. Remember that for such a small price, we are guarding ourselves from the detriments of identity and credit fraud.
In an article posted on the Dallas News Daily website, “the congressionally mandated study on credit report accuracy found that 20 percent of the 1,001 consumers who participated in the study had an error on at least one of their three credit reports”. But it is important to understand that the data which these credit bureaus gather may come to them with errors from the 40 plus smaller agencies that report to them. Information handed over by financial institutions like banks, creditors and even government organizations appears on your credit reports as how they were originally reported.
Howard Shelanski, director of the FTC’s Bureau of Economics states that, “These are eye-opening numbers for American consumers. The results of this first-of-its-kind study make it clear that consumers should check their credit reports regularly. If they don’t, they are potentially putting their pocketbooks at risk.”
The government has made credit checks as hassle-free as possible. Even credit reporting organizations have given consumers an option to obtain copies of their credit reports anytime they please.
Here are some of the things to look out for when checking your credit report:
- Personal information that is typed incorrectly. Spell check and scan your social security number, account numbers and even the list of employers and service providers that are listed on your credit report. Make sure that all data is correct and accurate.
- Unfamiliar credit accounts, unauthorized transactions and loan or services under your name that you are not aware of. You might have been a victim of identity fraud.
- Check for public records such as bankruptcies, tax liens and civil judgments which are not yours. These are matters that you don’t want to appear on your credit reports as potential business partners, employers, creditors and landlords initially check your file before hiring or approving your application.
By checking your credit regularly, you are increasing your chances for credit services approval. More importantly, you may be able to avoid falling victim to a credit scam which can cause unnecessary troubles and stress.
How often do you check your credit report? We’d like to know your thoughts. Feel free to share your comments below.