Start 2020 Off Right with a Credit Report Review

2020 is here - a new year and a new decade. If you are like most Americans you have probably established a few New Year’s resolutions. If 2020 is like 2019 (and many years before that), you are likely resolving to get in shape, lose weight, eat healthier, improve your approach to self-care, learn a new skill, get a new job, or manage your money better. And managing your money better is a critical lifestyle change that will help you become financially healthier (and mentally healthier too).

One of the best ways to manage your money better is to ensure that you have a solid credit rating and that you are on top of the information that the credit bureaus (Experian, Equifax, and TransUnion) have about you. Any financial advisor will tell you that you should pull your credit report at least once per year (it’s free to do so one time per year as part of the Fair Credit Reporting Act).

Three Key Benefits of Pulling Your Credit Report Once Per Year

Those who are diligent about pulling their credit report once per year experience several benefits. But most importantly, you will benefit from the following:

1. Pulling your credit report provides you with the opportunity to dispute potentially erroneous information on your report. By getting into an annual rhythm of checking for accuracy, your credit file will become stronger and will look as good as possible. This is important if you ever need to take out additional credit.
   
   
2. You will become aware of negative information in your credit file. Just one missed payment can stay on your credit report for as long as seven years. And, it often takes at least 30 days from the date of the missed payment for it to show up on your credit report. If you have accurate yet negative information on your report, an annual credit report will help you to mitigate the damage and hopefully minimize the long-term impact on your credit score.
   
   
3. By reviewing your credit report on a regular or annual basis, you are taking critical steps to ensure that you are not a victim of identity theft or other fraudulent activities. According to the Bureau of Justice Statistics (BJS), in 2016, 10% of persons age 16 or older had been victims of identity theft during the prior 12 months. Thus, reviewing your credit report and rectifying any records that do not belong to you is an absolute must-do at least once per year. And thankfully, the BJS indicates that 55% of identity-theft victims are able to resolve their associated financial or credit problems in one day or less.

Make a Review of Your Credit Report Part of Your Annual Checklist 

If you haven’t done so already, make an annual credit report pull part of your annual checklist that gets marked off the list in January of each year. Just like changing the batteries in your smoke detectors at the beginning of each year, starting the year with knowledge about your credit rating situation will set you up for better overall health.

All three credit bureaus are responsible to provide you with a free annual report should you request it. You can also pull a consolidated report directly from FICO or by going directly to www.annualcreditreport.com. 

Stay tuned for our next blog: Setting a Budget and Living Within Your Means

As part of your annual checklist, it is important to review your budget and spending habits on an annual basis. Doing this as part of the new year will help set you up for success both for the coming year ahead and well into the future.