5 Reasons You Should Monitor Your Credit Regularly
SAN JOSE, CA., January 12, 2021 /PRNewswire/ — Your FICO® scores are a key indicator of the health of your credit history, which is an important part of your overall financial well-being.
Keep track of your FICO scores will not only make it easier to establish and maintain a great credit history, but will also give you the opportunity to deal with problems as they arise instead of waiting for the damage to be done. Here are five reasons why monitoring your credit regularly is one of the most important things you can do with your finances, from myFICO.
For more information on loans and credit, visit the myFICO blog at https://www.myfico.com/credit-education/blog
1.You can spot fraud before it wreaks havoc on your credit
There are many different forms of identity theft, but the one that can cause significant damage to your FICO® scores is when someone uses your information to apply for credit on your behalf. This criminal act is called new account fraud, and the losses attributed to it amount to $4 billion in 2019, according to Strategy and javelin research.
When someone uses your name, social security number, and other personal information to apply for credit, a firm credit application will be added to your credit reports. If the account is approved, you’ll also see the new account appear on your reports.
If you don’t track your FICO® scores, you may not know what happened, giving the thief time to build up a balance on a credit card or use funds from a loan and leave the bills unpaid. Even a single late payment can cause your FICO scores to drop significantly, but if you can catch the fraud before it gets to that point, you can dispute it with the credit bureaus and have it removed from your file. credit.
At that time, you will also have the option of freeze your credit reports so that if someone tries to open an account in your name again, the lender will not be able to access your reports and approve the application. Alternatively, you can add a fraud alert to your reports, which notifies creditors that you may be a victim of fraud and encourages them to contact you directly to verify the claim.
2. You can check for potential inaccuracies
It doesn’t happen often, but sometimes a creditor may report something inaccurate to the credit bureaus, or the credit bureaus may include something inaccurate in your credit reports. If it’s a negative item, it could damage your FICO® scores, especially if it goes unnoticed for a while.
The good news is that you can disputed items on your credit reports which are inaccurate or unfounded. File a dispute directly with each individual credit bureau that lists information on your report – they will take 30 days to investigate your claim.
If a bureau can validate your claim that the item is inaccurate or unsubstantiated, they will remove it from your credit report, which can have an immediate impact on your FICO® scores.
However, if you don’t monitor your credit regularly, it can be easy to miss these potential problems.
3. You will better understand how your actions affect your FICO scores
Your FICO® scores are influenced by five main factors: your payment history, how much you owe, the length of your credit history, your credit composition and the search for new credit. But there are a lot of smaller things in these categories that can impact your FICO scores in different ways.
As you keep track of your scores, you’ll be able to see how your payments, balances, new accounts, and other information reported to the credit bureaus affects your FICO® scores for better or worse.
It will also give you a better understanding of what you can do to resolve potential issues as they arise.
4. You’ll always be ready for credit when you need it
Your FICO® scores are most important when it comes to applying for credit. But whether you’re applying for car or home insurance, looking for a job, or renting a new apartment, your credit is also important. They can’t use your FICO scores to make a decision, but they can use information from your credit reports, which is directly tied to your score.
It’s common for financial experts to recommend checking your credit before applying for a loan or credit card to find out if you need to make any changes before applying. But if you’ve monitored your credit and practiced good credit habits as you go, your credit will always be ready when you need it.
That way, if you’re in an emergency and need financing, you don’t have to worry about high interest rates as much. And if you want to buy a new car or a new house, you don’t have to wait until your credit is where it needs to be before you apply — it’s already there.
5. Know when you might qualify for better deals or terms
If you’re working on building your credit so you can apply for a specific credit card offer or refinance your car, student, or mortgage loan, checking your FICO® score regularly will let you know when it’s in the range. good range to potentially get approved for the account and terms you want.
For example, if you’re hoping to replace your secured credit card with an unsecured rewards card, knowing your FICO® scores can help you know when is a good time to apply.
Your FICO® scores are a vital part of your financial health, and there’s a long list of benefits to checking them regularly. When checking your FICO scores, ask yourself if you need to take action or if you’re on the right track.
myFICO makes it easy to understand your credit with FICO® Scores, credit reports and alerts from all 3 bureaus. myFICO is the consumer division of FICO – get your FICO scores from the people who do FICO scores. For more information, visit https://www.myfico.com.