The results of a credit report, or credit report scores, have become a way of life for most people seeking loans, mortgages, credit cards, and even certain types of employment. Some credit monitoring companies keep the issue front and center in people's minds through catchy commercial jingles, as well as TV and email ads. Let's explore why regular personal credit monitoring is so important.
Personal Credit Bureaus
The primary purposes of personal credit bureaus are to monitor your creditworthiness, confirm your identity when you apply for credit, and validate your background information for any other types of borrowing requests you make. This combination of factors helps lenders determine if you are a good risk for various types of credit or loans.
Equifax is one of the most well known credit monitoring agencies among the "Big Three" that also includes Transunion and Experian. The company helps individuals and businesses to monitor their credit on a daily basis, prompts alerts to any significant changes or potential identity theft, and provides unlimited access to credit scores, along with an estimator to determine how different actions can affect or change scores. Equifax uses its own exclusive scoring model with scores ranging from 280 to 850.
Purposes of Credit Reports
In the process of evaluating your eligibility for credit cards, loans, or mortgages, various companies review your credit report for the following purposes:
Determine your current indebtedness.
Ascertain your on time or late payments on current debts.
Discover the types of credit you use and how often you apply for credit.
Review open accounts.
Compare credit used vs. credit limits.
Primary Reasons to Monitor Your Credit Report
There are three primary reasons to regularly monitor your personal credit score and keep track of what is on your credit report:
1. Know who is viewing your credit report and why. It can be surprising to see who is peeking at your credit report. Some of these may include phone and utility companies; car dealers; store owners and online merchants who offer charge accounts; credit card companies; and your bank or credit union. Even some employers now look into people's credit reports, particularly if the potential employment is in areas dealing with managing money and other assets. These may include banks, credit unions, other financial institutions and brokerage firms, government jobs, and jewelry manufacturers and retail stores.
2. Confirm no identity theft is taking place. This is one of the most essential reasons to consistently monitor your credit report. If you see strange transactions that you know for certain are NOT yours, you can immediately notify the credit bureau. This enables the bureau to investigate and remove harmful data from your credit report that can adversely affect your scores and limit future credit or loan options. The bureau can also insure you against damage done if identity theft occurs.
3. Maintain a good FICOscore. FICO is a proprietary or exclusive scoring model used by the Fair Isaac Corporation to determine your credit worthiness. FICO, similar to Equifax, uses a range of scores from 300 to 850 to indicate credit risk; the higher scores signify lower credit risk, while the lower scores represent higher credit risk. Anything from 632 and under is considered bad to poor. Average FICO scores typically start at about 633, while excellent scores begin around 752. Higher FICO scores improve your chances for approval of credit cards with higher credit lines, as well as approval of significantly higher loans and mortgages.
So do you know YOUR personal credit score? Are you aware of what is happening on your credit report? If not, learn what your rights are regarding your credit report and credit scores, and begin monitoring them consistently. You have the right to receive one free annual credit file disclosure or credit report. Beyond that, you may choose to invest in the special services of Equifax or any of the other credit monitoring agencies. Warning! Keep An Eye On Your Credit