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Why It's Crucial To Check Your Personal Credit Report Annually
By EchoBay Loans Staff Writer

In the good old days, the only time you heard about your credit report was during the purchase of a home, a mortgage refinance or perhaps an auto loan. Now, with personal credit reports available over the Internet and the increasing reliance of credit report and score information in deciding how much you will spend on debt, you should consider the recommendation to check your credit report annually as firm advice.

If you're not buying a home or other major purchase, do you really need to check your personal credit report once a year? Yes, primarily because not doing so can wind up costing a fortune in unnecessary charges due to errors or fraudulent activity.

Checking for errors

Credit report errors happen all the time.
Common errors include personal information inaccuracies, misreported payment information, duplications, accounts mistakenly reporting after a bankruptcy discharge, and many others.

When you move, open a new account, apply for new credit, make payments or change your name, your credit file at all three bureaus (Experian, Equifax & TransUnion) must keep up. The information the bureaus maintain comes directly from your credit accounts. The average consumer has 6 credit cards, according to Fair, Isaac & Company (Myfico). The volume of data from multiple sources, changing so often, makes errors a natural result that you should anticipate from time to time.

Some errors don't cause you to lose points from your credit score, but many do. Any time your credit score is lowered, whether you're aware of it or not, money is pulled out of your pocket. Interest charges hike up on new credit accounts, terms tighten and down payment requirements increase. Did you know that auto insurance companies check your credit report to help set your premiums? These and other hidden charges result directly from a low credit score.

When you check your personal credit report annually, you can catch errors as they happen, correct them and keep your credit score at its highest-while keeping your bills at their lowest.

Reviewing for fraud

Fraud and identity theft have caused a surge in the number of consumers who check their personal credit report regularly, and appropriately so. Not all fraud hits your radar immediately. Many people don't even know their identity has been used until they go to apply for a mortgage or other credit account and are turned down, despite perfectly good credit and scoring behavior.

It's easy to spot fraud when you check your credit report regularly. It takes minutes to discover accounts that you didn't open, or a history of unusual late or missing payments, but it can save a great many hours (and dollars) when caught early. You'll also help protect others who are next on the fraud perpetrator's list.

When to check more often than annually

In a few instances you'll want to check your credit report more than once per year. When you develop plans for a major purchase, like a home or auto, review your report as far in advance as possible to ensure it's error-free and to optimize your score. If you notice suspicious activity, such as bills for accounts that you didn't open, or bills that never make it to you, or phone calls about account problems that seem out of line, check with the bureaus immediately.

Some agencies sell subscriptions for monthly monitoring, as well as services that notify you when any new information hits your credit file. For many consumers, this level of monitoring isn't necessary, but if you've been a victim of identity theft or if you're working toward a higher credit score for a major purchase on credit, it can be useful. Decide what you want from your credit file-simple maintenance, repair, fraud recovery, score optimization-and you'll have a better idea what interval is right for you.

To check your personal credit report annually is like going to the dentist; simple maintenance helps prevent pain & loss. The process takes no more than 30 minutes if there are no errors or problems, and if there are, finding and fixing them is invariably faster and cheaper than letting them interfere with your credit score or financial health. Get in the habit today.


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