Having a reasonably good credit rating is essential if you want to obtain finance at an affordable rate. If your credit score is poor, it makes perfect sense to obtain a copy of your credit file, and set about doing whatever you can to remove any negatives and give your creditworthiness a boost. However, even if you have a decent credit history, it’s still an excellent idea to monitor your file for changes. Here’s why.
Virtually all the upkeep of your credit file is automated, and mistakes can occasionally happen and go unnoticed. While rare, it’s not unknown for entirely false information to be added to a file, such as defaults made by someone with a similar name and address being wrongly attributed to you. Less seriously but more commonly, the balances of your various accounts or statuses of your minor debts can be out of date or incorrectly represented. Monitoring your files will let you spot any of these errors before they cause you too much financial trouble.
If a cybercriminal steals your online identity, it can wreak havoc with your financial profile and creditworthiness. Regularly checking your credit file for suspicious entries will give you an early indication that your identity may be under threat.
Pick Up on Overlooked Debts
Not every negative entry on your credit file will be preceded by lengthy collection attempts. Often, if a debt is only for a small amount, the creditor will simply write it off rather than begin expensive recovery proceedings. This can happen quite by accident if you overlook a debt such as a catalog purchase, for example if you move and forget to notify the company of your change of address. Keeping an eye on your credit file will alert you to these minor problems, preventing them from having to much of an impact on your rating.
Changes in Your Credit Terms
Most people ignore the long-winded documents credit card companies send out when they make changes to the terms and conditions of your agreement. However, this sometimes means important information is missed. If, for example, the due date for payment each month is brought forward, you will spot this when a late payment shows on your file. Of course, everyone knows they should be checking their monthly credit card statements carefully to spot such issues, but it never hurts to have a second line of defense.
An Easy Financial Overview
Lastly, if your financial situation is fairly complex and you have a number of open accounts, your credit file provides a convenient overview of your entire profile. It will let you see exactly how much combined debt you’re carrying, and the level may surprise you when you see the accounts listed side by side, as well as the amount of unused credit you can draw on in an emergency. It can also give an insight into how you could restructure your finances to take advantage of the options you already have, without entering into new credit agreements such as a consolidation loan.
You are legally entitled to view your credit file once a year for a nominal fee, and it’s well worth taking up this option. Alternatively, you could take a more comprehensive approach by signing up for a monitoring service, which will provide monthly reports along with immediate notifications of any significant changes. Either way, keeping tabs on your credit file will help you avoid many problems that could otherwise damage your creditworthiness through no fault of your own.