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Homeside: Your Modern Mortgage Blog

5 Signs You Need to Check Your Credit Report

Posted by Mikey Rox on February 2, 2016

Our credit health determines whether we qualify for financing and affects the interest rate we receive on loans and credit cards, yet many Americans ignore their credit. A 2015 survey by Bankrate.com found that more than 1 in 3 Americans have never checked any of their credit reports, and another 14% say “they typically go more than a year between checks.”

Your credit may not be something you think about every day, but it does require your attention. Here are five signs that you need to check your credit report.

1. You’re Applying for a Mortgage (or Any Type of Loan)

If you’re planning to purchase a home in the upcoming months or years, now’s the time to check your credit report. Never assume that your credit is good enough to qualify for a home loan. Even if you pay your bills on time, a credit report error or fraudulent activity can tarnish your credit report and lower your credit score. And unfortunately, some lenders will not approve your application until you’ve resolved the matter. Checking your credit report is how you identify problems that can result in a loan or credit rejection.

2. It’s Been Over a Year Since Your Last Check

Every consumer should check his or her credit report one to three times a year. If you can’t recall the last time you ordered your report, then you’re overdue for a peek. Pulling your own credit report doesn't result in a credit inquiry, so it doesn’t damage your credit score. And in most cases, you don’t have to pay for copies of your reports. Everyone is entitled to one free credit report from each of the three bureaus every 12 months. You can order reports directly from Experian, TransUnion and Equifax, or request free reports from AnnualCreditReport.com

3. You Receive Terrible Credit Card Offers

If you have no intentions applying for a new credit card, you might get rid of any credit card offers you receive in the mail. But before you shred these offers into a thousand pieces, make sure you look inside and check out the terms. What you may not realize is that those credit card offers say a lot about your credit history.

Rather than send the same credit card offer to everyone, banks use basic credit information to prescreen recipients, and then the bank sends pre-approved credit card offers based on each person’s credit health. If you’re receiving credit card offers with low rates and desirable terms, this can indicate a healthy credit score. On the other hand, if your credit card offers have high interest rates, monthly fees or require a security deposit, this can indicate an unhealthy credit score and you need to check your credit report and get to the bottom of the problem.

4. You’re Rejected for a Credit Card or Loan

If you’re rejected for a loan or credit card, you have the right to receive a free copy of your credit report. The company or bank that rejected your application must provide the name of the credit bureau they contacted. You can request a free copy of your report from this bureau within 60 days of receiving the rejection letter. Being denied can be frustrating and stressful, but it can also be a blessing in disguise. Don’t shrug off the rejection or ignore the letter. Understanding the reason for the rejection is one of the first steps to improving your credit and avoiding future rejections.

5. Your Credit Score Drops

Some credit card issuers are making it easier for customers to monitor their credit by having their FICO score appear on monthly statements, or by allowing customers to access their score anytime they log into their account.

Credit card issuers offering free credit scores include American Express, Discover, Citi, Bank of America and Chase. Although you’re given access to your credit score and not your full report, your FICO score provides clues about your credit standing. It’s not unusual for credit scores to fluctuate a little on a month to month basis depending on your credit activity. Applying for a new credit account or an increase in credit card debt may cause a slight drop in credit scoring, which isn’t a cause for concern. But if your score drops significantly from one statement to the next, and you can’t think of any reason for the decrease, this is a sign that you need to check your credit report. An unexpected score drop could indicate fraud or report errors.

Now that you're away of the 5 signs you need to check your credit report, get a free credit report check today!

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