Does hearing the word “credit” give you the chills? While these jitters could make you want to avoid it completely, building a good credit score can be essential to a secure and healthy financial life. Here are some ways that checking your credit can be more useful, and less scary, than you think:
1. It can help you spot identity theft
There was a record high 16.7 million victims of identity fraud in 2017. Credit card fraud ranked second highest among all types of identity theft, so keeping an eye on your credit report could help you spot a problem right when it starts.1 Issues to look out for include:2
- a new loan or credit card account opened in your name
- a public record showing you’ve filed for bankruptcy
- a legal judgment against you
- your credit limits have changed
If you think you’ve been a victim of identity theft, go to www.identitytheft.gov and file a claim. They have information and recovery plans for more than 30 types of identity theft, including credit card fraud.
2. You can make sure your personal information is correct
Checking your credit score also lets you double-check that your personal information is accurate. If your information is incorrect or mixed with someone else’s, it could create issues for everyone involved. Make sure the following identification information is correct each time you check your credit:
- Full name, including middle name and suffix, such as Jr., Sr., II, III
- Date of birth
- Social Security number
- Complete address, including apartment number if applicable
If you find any mistakes, follow these steps to dispute the errors.
3. It can help you plan ahead and achieve goals
Maintaining a strong credit score can help your financial future in several ways. Those with higher credit scores tend to get more favorable terms on loans and mortgages and even get cheaper auto insurance rates.3 Here are some potential goals you could set and achieve:
- Identify and change bad habits - For tips on how to break certain patterns of bad behavior, here are three credit habits to consider changing.
- Educate yourself on common credit terms - To help you get more familiar with the lingo, here are 10 common credit terms defined.
- Lower your credit card balances - If you’re interested in having no credit card debt, it can be done!
For more info, check out all our blogs on credit and credit management.
Not as spooky as you thought
Credit scores can be intimidating and even a little mysterious. However, once you begin to understand and use them to your advantage, you’ll wonder why you were ever scared in the first place.
1. Insurance Information Institute. “Facts + Statistics: Identity theft and cybercrime.” Iii.org. https://www.iii.org/fact-statistic/facts-statistics-identity-theft-and-cybercrime (accessed August 27, 2018.)
2. Federal Trade Commission. “Identity Theft Protection Services.” Consumer.ftc.gov. https://www.consumer.ftc.gov/articles/0235-identity-theft-protection-services (accessed August 27, 2018).
3. Consumerreports.org. “The Secret Score Behind Your Rates.” Consumerreports.org. https://www.consumerreports.org/cro/car-insurance/credit-scores-affect-auto-insurance-rates/index.htm (accessed August 27, 2018).